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The  Changing  Order 

Essays  on    Government,   Monopoly,   and 

Education,  Written  during  a  Period 

of  Readjustment 


By 
George  W.   Wickersham 

Sometime  Attorney-General  of  the  United  States 


G.  P.  Putnam's  Sons 

New  York  and  London 

$be   fmicketbocfter   press 

1914 


ft* 


Copyright,  1914 

BY 

GEORGE  W.  WICKERSHAM 


Ube  fmfcfcerbocfcer  Qvces,  flew  Ifforft 


PREFACE 

THESE  essays  are  bi-products  of  the  writer's 
work  as  head  of  the  United  States  Depart- 
ment of  Justice  during  the  four  years  from  March 
5,  1909,  to  March  5,  19 13.  That  period  was 
instinct  with  great  problems.  New  conceptions  of 
the  relation  of  government  to  industrial  organiza- 
tion were  asserting  themselves;  new  theories  of 
government  finding  expression.  The  old  order 
was  changing.  The  epochal  litigation  between  the 
government  and  great  industrial  combinations 
culminated  in  a  series  of  decisions  rendered  in  cases 
argued  during  that  period  in  the  Federal  Supreme 
Court.  By  these  decisions,  the  supremacy  of  law 
and  government  over  monopoly  was  established. 
During  the  same  period,  the  laws  regulating 
common  carriers  in  interstate  commerce  were  radi- 
cally amended,  and  these  laws,  and  great  questions 
arising  out  of  them,  also  were  brought  to  the 
Supreme  Court  for  construction  and  exposition. 
The  admission  of  the  territories  of  New  Mexico 
and  Arizona  into  the  Union  gave  rise  to  the 
discussion  at  the  National  Capitol  of  profound 
modifications  in  constitutional  government  as  it 
had  been  theretofore  understood  and  practised. 
These  changes  were  being  embodied  in  new  con- 
stitutions of  some  of  the  western  States.    Their 


»<0 


iv  Preface 

inclusion  in  the  constitutions  of  the  new  States, 
presented  to  the  Congress  for  approval,  compelled 
a  consideration  of  the  meaning  of  the  words 
"  republican  form  of  government,"  as  used  in  the 
Constitution  of  the  United  States. 

The  following  essays,  which  originally  were  pre- 
pared for  delivery  as  addresses  on  special  occasions, 
reflect  the  conflict  of  ideas  involved  in  the  discus- 
sion of  these  questions — problems  which  go  to  the 
very  roots  of  civilized  government.  It  is  because 
of  the  vital  nature  of  the  problems  discussed,  rather 
than  of  any  especial  merit,  literary  or  otherwise,  in 
the  essays,  that  I  venture  to  hope  that  what  I  have 
written  may  be  of  more  than  ephemeral  interest. 
Constant  requests  for  copies  of  some  of  these 
papers  have  encouraged  me  to  publish  this  collec- 
tion. For  while  the  old  order  indeed  changeth, 
yet  I  verily  believe  there  are  some  fundamental 
truths  concerning  government  which  have  stood 
the  test  of  time,  and  which  cannot  be  ignored 
without  unhappy  consequence.  What  some  of 
those  principles  are,  I  have  endeavored  to  show 
in  the  following  pages. 

G.  W.  W. 


New  York, 
April,  1 914. 


CONTENTS 

CHAPTER  PAGE 

I. — The  Progress  of  Law  i 

II. — The  State  and  the  Nation     .         .  17 

III. — College  Men  and  Public  Questions  30 

IV. — Palimpsests 38 

V. — Business  and  the  Law    .         .         .53 

VI. — Engineering  and  Culture       .         .  71 

VII. — The  Study  of  Law  and  the  Work 

of  Lawyers         ....  82 

VIII. — Recent      Interpretation      of      the 

Sherman  Act       .         .         .         .103 

IX. — Further  Regulation  of  Interstate 

Commerce 143 

X. — Results  of  the  Trust  Dissolution 

Suits 162 

XL — Federal  Control  of  Stock  and  Bond 

Issues  by  Interstate  Carriers  .  179 

XII. — New  States  and  Constitutions        .  217 

XIII. — The     Theory     of     Constitutional 

Government  in  1787  and  19 12    .  269 


The   Changing   Order 


i 

THE  PROGRESS  OF  LAW1 

IT  is  related  by  Herodotus  that  after  the  deposi- 
tion of  the  usurper  who  seized  the  throne  of 
Cambyses,  King  of  Persia,  the  three  leaders  of  the 
successful  movement  debated  as  to  the  form  of  a 
permanent  government  for  that  country.  Otanes, 
who  contended  for  a  democracy,  finding  himself 
in  the  minority,  proposed  to  yield  his  preferences 
to  the  other  two,  on  condition  that  neither  Megaby- 
zus  nor  Darius  should  reign  over  him  or  any  of 
his  posterity;  which  being  assented  to,  he  made 
no  further  opposition  to  the  establishment  of  a 
monarchy,  and  the  historian  adds : 

At  the  present  period  this  is  the  only  family  in 
Persia  which  retains  its  liberty,  for  all  that  is  required 
of  them  is  not  to  transgress  the  laws  of  the  country. 2 

1  Address  before  the  George  Washington  University,  Wash- 
ington, D.  C,  February  22,  19 10. 

3  Herodotus,  Beloe's  translation,  Book  3,  p.  165. 

1 


2  The  Changing  Order 

This  conception  of  liberty  under  law,  usually 
regarded  as  the  product  of  northern  independence 
of  character,  and  by  many,  as  peculiarly  an  Anglo- 
Saxon  inheritance,  thus  appears  to  be  of  much 
greater  antiquity,  and  although  often  obscured, 
sometimes  for  prolonged  periods,  it  has  ever  re- 
curred as  the  highest  ideal  of  civilized  human 
society. 

Herodotus  does  not  explain  to  us  in  what  respect 
the  liberty  guaranteed  to  Otanes  and  his  descen- 
dants differed  from  that  of  the  other  inhabitants 
of  Persia,  for,  it  will  be  observed,  he  considers  that 
the  family  of  Otanes  enjoyed  liberty  because  all 
that  was  required  of  them  was  that  they  should 
not  transgress  the  laws  of  the  country;  but  as  he 
does  state  that  the  first  act  of  Darius,  after  he  was 
proclaimed  King,  was  to  divide  Persia  into  twenty 
provinces,  and  to  fix  an  amount  of  annual  tribute 
which  each  was  to  pay  to  him,  it  would  seem  that 
the  historian  meant  to  indicate  a  distinction  be- 
tween government  and  law,  and  to  imply  that, 
while  subject  to  the  law,  the  favored  family  was 
relieved  from  the  burdens  of  government. 

Mr.  James  C.  Carter,  in  his  work  on  Law  and 
its  Origin,  maintains 

that  while  Legislation  is  a  command  of  the  Sovereign, 
the  unwritten  Law  is  not  a  command  at  all ;  that  it  is 
not  a  dictate  of  Force  but  an  emanation  from  Order; 
that  it  is  that  form  of  conduct  which  social  action 
necessarily  exhibits,  something  which  men  can  neither 
enact  nor  repeal,  and  which  advances  and  becomes 


The  Progress  of  Law  3 

perfect  pari  passu  with  the  advance  and  improvement 
of  society.  * 

Mr.  Carter  was  a  profound  student  of  the  Eng- 
lish common  law,  and  a  strong  believer  in  the  value 
of  customary  or  common  law,  as  opposed  to  statute 
law,  considering  that  those  customary  rules  of 
conduct  which  are  the  result  of  the  moral  con- 
sciousness and  progressive  thought  of  a  people,  af- 
ford a  better  working  basis  for  the  government 
of  a  civilized  state,  than  do  rules  of  conduct  pre- 
scribed by  legislative  authority.  It  is  the  function 
of  the  judges,  he  says, 

to  watchfully  observe  the  developing  moral  thought, 
and  catch  the  indications  of  improvement  in  customary 
conduct,  and  enlarge  and  refine  correspondingly  the 
legal  rules.  In  this  way,  step  by  step,  the  great 
fabrics  of  common  law  and  equity  law  have  been 
built  up  without  the  aid  of  legislation,  and  the  process 
is  still  going  on.2 

Yet  he  recognizes  the  necessity  for  the  employ- 
ment of  legislative  action,  or  what  he  calls  "the 
conscious  agency  of  society,"  in  the  improvement 
of  the  law  in  its  application  to  the  constantly 
developing  and  increasingly  complex  forms  of  mod- 
ern existence;  insisting,  however,  that  the  sole 
function  both  of  law  and  of  legislation  is  "to  se- 
cure to  each  individual  the  utmost  liberty  which 
he  can  enjoy  consistently  with  the  preservation  of 

'Pp.  344-5.  'P.  329. 


4  The  Changing  Order 

the  like  liberty  to  all  others,"  and  adding,  that 
every  abridgment  of  liberty  demands  an  excuse, 
and  that  its  only  good  excuse  is  the  necessity  of 
preserving  it. * 

It  is  the  acknowledged  duty  of  all  good  citizens 
to  obey  the  law,  be  that  law  written  or  unwritten. 
The  unwritten  law,  representing,  as  it  does,  a 
generally  prevailing  public  conception  of  right 
action,  must  necessarily  command  the  readiest 
obedience;  statutory  laws  too  frequently  embody 
the  ill-considered  views  of  a  moment,  the  expres- 
sion of  a  temporary  emotion,  or  the  successful 
determination  of  a  portion  of  the  community  to 
impose  their  will  upon  the  remainder.  The  sound 
growth  and  development  of  the  written  law  must 
follow  and  make  more  specific  and  more  readily 
enforcible  the  principles  of  unwritten  law,  or  it 
becomes  an  instrument  of  dissatisfaction  and  even 
of  oppression.  Yet  no  progress  in  the  improve- 
ment of  laws  is  realized  through  either  evasion  of 
or  organized  opposition  to  the  laws  of  a  self-govern- 
ing people.  As  Washington  said  in  his  farewell 
address : 

The  very  idea  of  the  power  and  the  right  of  the 
people  to  establish  government  presupposes  the  duty 
of  every  individual  to  obey  the  established  govern- 
ment. 

All  obstructions  to  the  execution  of  the  laws,  all 
combinations  and  associations  under  whatever  plaus- 
ible character,  with  the  real  design  to  direct,  control, 

TP.337. 


The  Progress  of  Law  5 

counteract,  or  awe  the  regular  deliberation  and  action 
of  the  constituted  authorities,  are  destructive  of  this 
fundamental  principle  and  of  fatal  tendency.  .  .  . 

However  combinations  or  associations  of  the  above 
description  may  now  and  then  answer  popular  ends, 
they  are  likely  in  the  course  of  time  and  things  to 
become  potent  engines  by  which  cunning,  ambitious, 
and  unprincipled  men  will  be  enabled  to  subvert  the 
power  of  the  people,  and  to  usurp  for  themselves  the 
reins  of  government,  destroying  afterwards  the  very 
engines  which  have  lifted  them  to  unjust  dominion.1 

The  history  of  every  civilized  state  presents 
many  points  of  resemblance  with  that  of  every 
other.  Primitive  communities  are  bound  together 
more  or  less  loosely,  dependent  upon  the  need  of 
union  for  common  defense  against  some  external 
enemy.  As  civilization  progresses,  a  necessity 
arises  for  rules  to  govern  the  action  of  the  indi- 
viduals in  the  community  toward  each  other,  more 
than  to  protect  the  group  against  the  aggressions 
of  other  groups ;  and  as  communities  become  more 
populous,  and  civilization  more  complex,  rules  of 
conduct  must  needs  be  increasingly  minute  and 
specific ;  but  the  fundamental  principle  guiding  all 
successful  civilization  must  be  to  preserve,  in  as 
large  a  measure  as  is  consistent  with  the  welfare 
of  the  whole,  freedom  of  action  in  the  individual. 
In  monarchical  countries  this  freedom  is  menaced 
more  from  the  head  of  the  state  than  from  other 
individuals  in  it.     Under  democratic  governments, 

1  Messages  and  Papers,  vol.  i.,  p.  218. 


6  The  Changing  Order 

the  individual  requires  more  protection  against 
other  individuals  or  groups  of  individuals ;  yet  the 
abuse  of  monarchical  power  has  often  resulted  in 
the  same  injury  to  the  welfare  of  individuals  as 
is  occasioned  by  abuse  of  the  power  which,  under 
democratic  institutions,  individuals  or  groups  of 
individuals  may  acquire  over  other  individuals  or 
groups. 

Queen  Elizabeth  of  England,  between  the  six- 
teenth and  forty-third  years  of  her  reign,  partly  for 
the  purpose  of  raising  revenue,  and  partly  to  re- 
ward her  favorites,  granted  a  very  large  number  of 
patents,  conferring  upon  their  holders  the  exclusive 
privilege  or  monopoly  for  designated  periods  of  time, 
to  manufacture,  sell,  or  deal  in  specified  articles  of 
commerce.  The  injury  to  the  community  caused 
by  these  special  privileges  became  so  great  as 
finally  to  produce  a  most  remarkable  and  spon- 
taneous outbreak  both  in  and  out  of  Parliament, 
which  led  to  a  complete  and  absolute  disavowal  by 
the  Queen  of  any  intention  to  afflict  her  subjects, 
the  cancellation  of  the  greater  part  of  these  patents, 
and  the  submission  to  the  judgment  of  the  courts 
of  law  of  the  validity  of  the  remainder.  The 
odious  character  of  these  monopolies  in  the  view 
of  the  English  people  of  that  day ,  is  vividly  depicted 
in  the  debates  of  the  time.  The  list  of  the  objects 
of  the  monopolies  is  truly  appalling.  They  em- 
braced the  exclusive  right  to  deal  in  such  articles 
as  iron,  powder,  cards,  leather,  cloth,  ashes,  vin- 
egar, sea  coals,  steel,  brushes,  saltpeter,  and  many 


The  Progress  of  Law  7 

others.     One  Dr.  Bennet,  during  a  discussion  in 
Parliament,  is  recorded  as  saying : 

In  respect  of  a  grievance  out  of  the  City  for  which 
I  come,  I  think  my  self  bound  to  speak  that  now 
which  I  had  not  intended  to  speak  before;  I  mean  a 
Monopoly  of  Salt.  It  is  an  old  Proverb  Sal  sapit 
omnia;  Fire  and  Water  are  not  more  necessary.  But 
for  other  Monopolies  of  cards,  (at  which  word  Sir 
Walter  Raleigh  blusht),  Dice,  Starch  and  the  like, 
they  are  (because  Monopolies)  I  must  confess  very 
hurtful,  though  not  all  alike  hurtful.  I  know  there  is 
a  great  difference  in  them;  And  I  think  if  the  abuses 
in  this  Monopoly  of  Salt  were  particularized,  this 
would  walk  in  the  fore  rank. 

He  was  followed  by  another  member  who  se- 
verely criticized  the  monopoly  in  tin.  This  brought 
Sir  Walter  Raleigh  to  his  feet.  He  could  have 
contented  himself  with  blushes  concerning  cards, 
but  the  attack  on  the  Tin  Monopoly  compelled 
him  to  speak.  The  arguments  he  resorted  to  in 
its  defense  have  become  familiar  to  later  genera- 
tions. 

When  the  Tinn  is  taken  out  of  the  Mine,  and  melted 
and  refined  [he  said],  then  is  every  piece  containing 
one  hundred  weight  sealed  with  the  Duke's  Seal. 
Now  I  will  tell  you,  that  before  the  granting  of  my 
Patent,  whether  Tinn  were  but  of  seventeen  shillings 
and  so  upward  to  fifty  shillings  a  hundred,  yet  the 
Poor  Workmen  never  had  above  two  shillings  the 
week,    finding    themselves:    But    since   my    Patent, 


8  The  Changing  Order 

whosoever  will  work,  may;  and  buy  Tinn  at  what 
price  soever,  they  have  four  shillings  a  week  truly 
paid.  There  is  no  Poor  that  will  work  there,  but  may, 
and  have  that  wages.  Notwithstanding,  [he  declared, 
evidently  perceiving  that  the  argument  fell  upon  deaf 
ears]  if  all  others  may  be  repealed,  I  will  give  my 
consent  as  freely  to  the  cancelling  of  this,  as  any 
Member  of  this  House.1 

Elizabeth  was  no  less  shrewd  than  Raleigh  in 
understanding  the  temper  of  the  time,  and  with  a 
clear  perception  that  the  public  conscience  was 
against  her,  she  disclaimed  all  purpose  of  afflicting 
her  subjects,  declared  she  had  acted  upon  bad 
advice,  and  authorized  her  minister,  Cecil,  to 
inform  the  House  that 

There  are  no  Patents  now  of  force,  which  shall  not 
presently  be  revoked;  for  what  Patent  soever  is 
granted,  there  shall  be  left  to  the  overthrow  of  that 
Patent,  a  Liberty  agreeable  to  the  Law.  There  is  no 
Patent  if  it  be  Malum  in  se,  but  the  Queen  was  ill  ap- 
prised in  her  Grant.  But  all  to  the  generality  be 
unacceptable.  I  take  it,  there  is  no  Patent  whereof 
the  Execution  hath  not  been  injurious.  Would  that 
they  had  never  been  granted.  I  hope  there  shall 
never  be  more.     (All  the  House  said  Amen,)2 

Therefore,  declared  Cecil — 

there  shall  be  a  Proclamation  general  throughout  the 
Realm  to  notify  her  Majesties  resolution  in  this  be- 

1  D'Ewes,  Journals  of  the  Parliaments,  pp.  645-6. 
'Id.,  p.  652. 


The  Progress  of  Law  9 

half.  And  because  you  may  eat  your  meat  more 
savourly  than  you  have  done,  every  man  shall  have 
Salt  as  good  cheap  as  he  can  either  buy  it  or  make  it, 
freely  without  danger  of  that  Patent,  which  shall  be 
presently  revoked.  .  .  .  And  they  that  have  weak 
stomachs,  for  their  satisfaction,  shall  have  Vinegar 
and  Alegar,  and  the  like  set  at  liberty.  Train  Oyl  shall 
go  the  same  way;  Oyl  of  Blubber  shall  march  in  equal 
rank;  Brushes  and  Bottles  endure  the  like  Judgment. 
.  .  .  Those  that  desire  to  go  sprucely  in  their  Ruffs 
may  at  less  charge  than  accustomed  obtain  their  wish ; 
for  the  Patent  for  Starch,  which  hath  so  much  been 
prosecuted,  shall  now  be  repealed.1 

In  the  year  following  these  debates,  in  the  great 
case  of  The  Monopolies,  it  was  held  by  the  Court 
of  Queen's  Bench  that  a  patent  granted  by  Queen 
Elizabeth,  to  Ralph  Bowes,  Esq.,  conferring  on 
him  the  sole  and  exclusive  right  to  make  and  sell 
playing  cards  within  the  realm  for  a  term  of  years, 
was  utterly  void  for  two  reasons:  (1)  that  it  was  a 
monopoly  and  against  common  law;  (2)  that  it 
was  against  divers  acts  of  Parliament.  It  was 
against  common  law  because — 

1.  All  trades,  as  well  mechanical  as  others,  which 
prevent  idleness  (the  bane  of  the  commonwealth) 
and  exercise  men  and  youth  in  labour,  for  the  main- 
tenance of  themselves  and  their  families,  and  for  the 
increase  of  their  substance,  to  serve  the  Queen  when 
occasion  shall  require,  are  profitable  for  the  common- 
wealth, and  therefore  the  grant  to  the  plaintiff  to 

^.652. 


io  The  Changing  Order 

have  the  sole  making  of  them  is  against  the  common 
law,  and  the  benefit  and  liberty  of  the  subject. 

2.  The  sole  trade  of  any  mechanical  artifice,  or 
any  other  monopoly,  is  not  only  a  damage  and  preju- 
dice to  those  who  exercise  the  same  trade,  but  also  to 
all  other  subjects,  for  the  end  of  all  these  monopolies 
is  for  the  private  gain  of  the  patentees ;  and  although 
provisions  and  cautions  are  added  to  moderate  them, 
yet  ...  it  is  mere  folly  to  think  that  there  is  any 
measure  in  mischief  or  wickedness:  and,  therefore, 
there  are  three  inseparable  incidents  to  every  mon- 
opoly against  the  commonwealth,  sc.  i.  That  the 
price  of  the  same  commodity  will  be  raised,  for  he 
who  has  the  sole  selling  of  any  commodity,  may  and 
will  make  the  price  as  he  pleases.  .  .  .  The  2d  in- 
cident to  a  monopoly  is,  that  after  the  monopoly  is 
granted,  the  commodity  is  not  so  good  and  merchant- 
able as  it  was  before ;  for  the  patentee  having  the  sole 
trade,  regards  only  his  private  benefit,  and  not  the 
common  wealth.  3.  It  tends  to  the  impoverish- 
ment of  divers  artificers,  and  others,  who  before,  by 
the  labor  of  their  hands  in  their  art  or  trade,  had 
maintained  themselves  and  their  families,  who  now 
will  of  necessity  be  constrained  to  live  in  idleness 
and  beggary.  .  .  . 

3.  The  Queen  was  deceived  in  her  grant;  for  the 
Queen,  as  by  the  preamble  appears,  intended  it  to 
be  for  the  weal  public,  and  it  will  be  employed  for  the 
private  gain  of  the  patentee,  and  for  the  prejudice  of 
the  weal  public;  .  .  .* 

The  principles  of  this  great  decision  have  been 
recognized  as  immutable  in  all  later  discussions 
1 11  Coke's  Reports,  84  b. 


The  Progress  of  Law  n 

of  the  subject  in  the  law  of  England  or  America. 
All  subsequent  statutes  against  monopolies  in 
England  and  America  depend  for  their  reason  on 
the  principles  so  clearly  and  so  quaintly  set  forth 
in  this  judgment.  In  the  development  of  our 
modern  civilization,  with  our  boundless  natural 
wealth  and  our  unexampled  facilities  of  transpor- 
tation and  communication,  by  individual  effort 
working  through  the  machinery  of  compact 
organization,  the  people  of  the  United  States 
twenty  years  ago  found  themselves  confronted 
with  conditions  strongly  resembling  those  which 
aroused  the  people  of  England  and  their  represen- 
tatives in  Parliament  to  the  point  of  revolt  against 
even  so  beloved  a  sovereign  as  their  Virgin  Queen. 
These  conditions,  however,  unlike  those  of  1601, 
were  not  wholly  occasioned  by  sovereign  grant, 
although  they  were  in  large  measure  the  result  of 
the  abuses  of  grants  by  sovereign  powers  of  cor- 
porate existence  and  the  facilities  of  corporate 
organization.  No  such  comprehensive  control 
over  any  one  of  the  great  industries  which  were 
dominated  by  those  large  aggregations  of  capital 
called  "  trusts' '  could  have  been  attained  but 
through  the  exercise  of  powers  granted  by  the 
sovereign  States ;  and  the  condition,  therefore,  was 
strongly  analogous  to  that  which  arose  in  the  reign 
of  Elizabeth.  True,  this  form  of  control  had  not 
yet  resulted  in  that  absolute  power  which  the 
patentees  of  Elizabeth  possessed  over  the  sale  of 
salt,  vinegar,  and   the  like.     But  mindful  that 


12  The  Changing  Order 

"Eternal  vigilance  is  the  price  of  liberty,"  and  to 
employ  Webster's  immortal  phrase,  "While  actual 
suffering  was  yet  afar  off."  We,  like  our  ancestors 
of  revolutionary  days,  raised  our  arms,  by  the 
peaceful  method  of  legislation,  against  a  power 
which  we  perceived  rising  cloud-like  on  our  eco- 
nomic horizon.  We  saw  the  rapid  concentration 
of  power  over  our  great  industries  in  a  few  hands ; 
a  power  which  no  free  state  can  long  suffer  to 
endure;  the  power  of  fixing  prices  at  will,  deter- 
mining the  amount  of  production,  dictating  the 
terms  on  which  thousands  of  our  fellow-country- 
men might  pursue  their  means  of  livelihood;  the 
power  to  exclude  or  permit  competition ;  all  the  ele- 
ments of  those  monopolies  which  so  stirred  the 
generation  of  Englishmen  from  whom  the  Pilgrim 
Fathers  came.  The  problem  was  complicated  by 
the  dual  nature  of  our  government.  Concerted 
action  by  the  States  was  impracticable,  it  may  be 
said,  impossible.  Efforts  at  control  by  one  State 
were  evaded,  first  by  removing  to  another;  then 
by  the  device  of  holding  corporations.  Therefore 
the  evil  could  not  be  met  merely  through  the  de- 
velopment and  application  of  the  unwritten  law, 
although  its  principles  clearly  established  the  un- 
lawfulness of  all  monopolies.  Some  means  had  to 
be  found  through  the  exercise  of  national  power  to 
check  the  continued  concentration  of  control  of 
the  great  industrial  life  of  the  country. 

In  this  instance,  as  in  so  many  others  in  our 
national  history,  there  was  found  in  the  simple  but 


The  Progress  of  Law  13 

comprehensive  charter  of  our  national  government 
the  basis  for  a  solution  of  the  problem,  and  the 
prevention  of  the  further  growth  of  these  great 
abuses,  by  the  exercise  of  what  Mr.  Carter  called 
1 '  the  conscious  agency  of  society ' '  speaking  through 
the  national  legislature. 

In  the  power  conferred  upon  the  Congress  to 
regulate  trade  and  commerce  among  the  States 
and  with  foreign  nations,  there  was  discovered  a 
weapon  adequate  to  the  need;  and  the  simple, 
comprehensive  enactment  that  all  contracts  and 
combinations  in  restraint  of  interstate  or  foreign 
commerce  should  be  unlawful,  and  that  the  Fed- 
eral courts  should  be  empowered  to  enjoin  and 
restrain  violations  of  the  act,  placed  in  the  hands 
of  the  national  judiciary  the  power  to  stem  the 
rising  tide  of  monopoly. 

The  underlying  principle  in  this  legislation  is 
the  preservation  of  the  right  of  the  individual 
to  carry  on  trade  and  commerce,  free  from  undue 
control  and  restraint  on  the  part  of  great  ag- 
gregations of  individuals  or  capital;  in  a  word, 
to  protect  the  individual  from  the  tyranny  of  a 
group. 

In  the  development  of  civilization,  after  four 
hundred  years,  in  a  new  world,  the  same  menace 
to  free  institutions  had  arisen  which  had  recurred 
from  time  to  time  in  earlier  civilizations;  and  by 
the  application  of  the  principles  of  liberty,  based 
upon  the  fundamental  conceptions  expressed  by 
the  ancient  Persian  and  recorded  by  Herodotus, 


14  The  Changing  Order 

there  was  found  an  effective  bulwark  for  the 
protection  of  a  people  from  industrial  slavery. 
Well  might  Washington  say  as  he  did  in  his 
farewell  message: 

To  the  efficacy  and  permanency  of  your  union 
a  government  for  the  whole  is  indispensable.  .  .  . 
Sensible  of  this  momentous  truth,  you  have  improved 
upon  your  first  essay  by  the  adoption  of  a  Constitu- 
tion of  Government  better  calculated  than  your 
former  for  an  intimate  union  and  for  the  efficacious 
management  of  your  common  concerns.  This  Gov- 
ernment, the  offspring  of  your  own  choice, uninfluenced 
and  unawed,  adopted  upon  full  investigation  and 
mature  deliberation,  completely  free  in  its  principles, 
in  the  distribution  of  its  powers,  uniting  security  with 
energy,  and  containing  within  itself  a  provision  for 
its  own  amendment,  has  a  just  claim  to  your  confi- 
dence and  your  support.  Respect  for  its  authority, 
compliance  with  its  laws,  acquiescence  in  its  measures, 
are  duties  enjoined  by  the  fundamental  maxims  of  true 
liberty. 

The  need  and  the  purpose  of  our  Federal  Con- 
stitution never  have  been  more  comprehensively 
and  accurately  stated  than  in  Washington's  dec- 
laration in  the  paragraph  just  read:  "for  an  in- 
timate union  and  for  the  efficacious  management 
of  your  common  concerns." 

It  is  because  of  the  increase  in  the  number  and 
character  of  our  common  concerns  that  we  are 
turning  more  and  more  to  the  source  of  national 
power  for  the  principles  which  permit  of  its  appli- 


The  Progress  of  Law  15 

cation  to  new  evils  as  they  arise,  and  to  the  ex- 
tension of  benefits  and  advantages  which  are  of 
common  concern  to  all;  not  merely  to  a  particular 
State  or  locality. 

The  f  ramers  of  the  Constitution  were  thoroughly 
imbued  with  the  principles  of  the  common  law, 
and  they  understood  the  language  of  the  law.  In 
expressing  the  grant  of  power  which  they  agreed 
upon  to  the  new  Federal  government,  they  were 
possessed  by  no  pedantic  love  of  minute  accuracy. 
On  the  contrary,  they  employed  the  broadest 
and  most  comprehensive  language  possible  to 
express  the  principles  which  they  were  formulat- 
ing, thus  leaving  unfettered  the  application  of  those 
principles  to  the  manifold  and  changing  phases 
which  future  growth  and  development  might  make 
essential  to  the  preservation  of  the  fundamental 
object  of  the  Union;  to  provide  "for  the  efficacious 
management* '  of  "the  common  concerns"  of  the 
whole  country. 

Very  shrewdly  were  these  great  powers  devolved 
upon  the  national  government.  Hamilton  an- 
swered the  objection  that  they  would  tend  to 
render  the  government  of  the  Union  too  powerful 
in  the  seventeenth  paper  in  the  Federalist. 

Speaking  of  the  principle  embodied  in  the  Con- 
stitution of  legislating  for  the  individual  citizens 
rather  than  for  the  States,  and  adverting  to  the 
objection  that  such  principles  would  tend  to  make 
the  Union  too  powerful  and  enable  it  "to  absorb 
those  residuary  authorities  which  it  might    be 


16  The  Changing  Order 

judged  proper  to  leave  with  the  States  for  local 
purposes,"  he  said: 

Allowing  the  utmost  latitude  to  the  love  of  power 
which  any  reasonable  man  can  require,  I  confess  I  am 
at  a  loss  to  discover  what  temptation  the  persons 
entrusted  with  the  administration  of  the  general 
government  could  ever  feel  to  divest  the  states  of  the 
authorities  of  that  description.  The  regulation  of 
the  mere  domestic  police  of  a  state  appears  to  me  to 
hold  out  slender  allurements  to  ambition. 

Hamilton's  mind  was  ever  imperial! 

Commerce  [he  continued],  finance,  negotiation  and 
war  seem  to  comprehend  all  the  objects  which  have 
charms  for  minds  governed  by  that  passion;  and  all 
the  powers  necessary  to  those  objects  ought  in  the 
first  instance  to  be  lodged  in  the  national  depository. 

And  so  there  they  were  lodged  by  the  charter 
of  our  indissoluble  union;  and  to  them,  as  our 
need  bids,  we  turn  for  the  effective  vehicles  of  the 
progressive  development  of  a  great  and  free  coun- 
try; whose  laws  must  be  adequate  to  cope  with 
every  problem  which  the  restless  ambition  of  man 
can  invent,  to  the  end  that  this  land  may  ever 
display  a  signal  example  of 

Liberty  and  Union 
Now  and  forever 
One  and  inseparable. 


II 

THE  STATE  AND  THE  NATION  x 

THE  administration  of  Federal  justice  is  the 
most  vital  agency  of  the  national  govern- 
ment. The  system  of  Federal  government  tinder 
which  a  separate  and  distinct  sovereignty  erects  its 
agencies  and  expounds,  administers,  and  enforces 
its  laws  within  the  States,  independently  of  those 
of  the  States,  also  in  theory  sovereign,  except 
where  and  to  the  extent  that  they  have  voluntarily 
parted  with  some  attribute  of  sovereignty,  is  at 
once  the  admiration  and  the  despair  of  foreign 
students  of  our  institutions,  and  is  often  a  source 
of  perplexity  to  ourselves. 

The  Constitution  of  the  United  States  and  laws 
and  treaties  made  pursuant  to  its  authority  are, 
it  is  agreed,  the  supreme  law  of  the  land,  anything 
in  the  constitution  or  laws  of  any  State  to  the 
contrary  notwithstanding.  But  ever  since  the 
foundation  of  the  Federal  government  a  constant 
pressure  has  developed,  first  one  way,  then  an- 
other; State  against  nation,  nation  against  State, 

1  The  substance  of  an  address  delivered  at  the  opening  of  a 
new  Federal  building  in  Cleveland,  Ohio,  March  20,  191 1. 
2  17 


1 8  The  Changing  Order 

to  magnify  or  minimize  the  powers  granted  to  the 
Federal  government  by  the  Constitution. 

During  the  last  decade  or  two  there  has  been  a 
growing  tendency  in  the  States  to  call  on  the  na- 
tional government  for  many  things  which  are 
properly  within  the  functions  and  duties  of  the 
States,  but  which,  through  the  extension  of  certain 
powers  granted  to  Congress,  may  be  also  brought 
within  the  scope  of  Federal  regulation. 

This  tendency  has  been  so  marked,  that  at  times 
the  States  seem  to  have  abdicated  an  important 
part  of  their  ordinary  police  powers,  and  to  have 
sought  to  escape  their  natural  responsibilities  by 
devolving  them  upon  the  general  government. 

The  principles  regulating  the  respective  powers 
of  State  and  Federal  government  are  clearly  stated 
by  Mr.  Justice  Harlan  in  delivering  the  judgment 
of  the  Supreme  Court  in  a  very  recent  case. 

There  are,  he  says,  certain  fundamental  prin- 
ciples which  prior  decisions,  to  which  he  refers  in 
his  opinion,  recognize,  and — 

which  are  not  open  to  dispute.  .  .  .  Briefly  stated, 
those  principles  are:  That  the  Government  created 
by  the  Federal  Constitution  is  one  of  enumerated 
powers,  and  can  not,  by  any  of  its  agencies,  exercise 
an  authority  not  granted  by  that  instrument,  either 
in  express  words  or  by  necessary  implication;  that 
a  power  may  be  implied  when  necessary  to  give  effect 
to  a  power  expressly  granted;  that  while  the  Consti- 
tution of  the  United  States  and  the  laws  enacted 
in  pursuance  thereof,  together  with  any  treaties  made 


The  State  and  the  Nation  19 

under  the  authority  of  the  United  States,  constitute 
the  supreme  law  of  the  land,  a  State  of  the  Union  may- 
exercise  all  such  governmental  authority  as  is  con- 
sistent with  its  own  constitution,  and  not  in  conflict 
with  the  Federal  Constitution;  that  such  a  power  in 
the  State,  generally  referred  to  as  its  police  power,  is 
not  granted  by  or  derived  from  the  Federal  Consti- 
tution but  exists  independently  of  it,  by  reason  of  its 
never  having  been  surrendered  by  the  State  to  the 
General  Government;  that  among  the  powers  of  the 
State,  not  surrendered — which  power  therefore  re- 
mains with  the  State — is  the  power  to  so  regulate  the 
relative  rights  and  duties  of  all  within  its  jurisdiction, 
so  as  to  guard  the  public  morals,  the  public  safety 
and  the  public  health,  as  well  as  to  promote  the  pub- 
lic convenience  and  the  common  good;  and  that  it  is 
with  the  State  to  devise  the  means  to  be  employed  to 
such  ends,  taking  care  always  that  the  means  devised 
do  not  go  beyond  the  necessities  of  the  case,  have 
some  real  or  substantial  relation  to  the  objects  to  be 
accomplished,  and  are  not  inconsistent  with  its  own 
constitution  or  the  Constitution  of  the  United  States.1 

That  these  principles  have  not  been  always 
clearly  perceived  is  illustrated  by  the  history  of 
the  State  of  Ohio — not  to  mention  that  of  other 
States. 

In  the  Ordinance  of  July  13,  1787,  providing 
for  the  government  of  the  northwestern  territory, 
certain  articles  were  formulated  as  "articles  of 
compact  between  the  original  States  and  the  people 
and  States  in  the  said  territory  "  for  the  purpose  of 

1  House  v.  Mayes  (219  U.  S.,  270,  281). 


20  The  Changing  Order 

"extending  the  fundamental  principles  of  civil 
and  religious  liberty,  which  form  the  basis  wherein 
these  republics,  their  laws,  and  constitution  are 
erected;  to  fix  and  establish  those  principles  as 
the  basis  of  all  laws,  constitutions,  and  govern- 
ments which  forever  hereafter  shall  be  formed  in 
the  said  territory."  These  articles,  it  was  de- 
clared, should  "  forever  remain  unalterable,  unless 
by  common  consent/' 

These  articles  in  effect  embodied  those  funda- 
mental principles  of  civil  liberty  which  have  been 
the  woof  and  fabric  of  Anglo-Saxon  institutions 
since  they  were  first  set  forth  in  Magna  Charta: 
principles  which  were  also  embodied  in  the  first 
ten  amendments  to  the  Constitution  of  the  United 
States,  adopted  in  November,  1791. 

The  Ordinance  further  provided  that — 

The  navigable  waters  leading  into  the  Mississippi 
and  St.  Lawrence  and  the  carrying  places  between 
the  same  shall  be  common  highways  and  forever  free 
as  well  to  the  inhabitants  of  the  said  territory  as  to 
the  citizens  of  the  United  States  and  those  of  any  other 
States  that  may  be  admitted  into  the  confederacy, 
without  any  tax,  impost,  or  duty  therefor. 

Freedom  of  trade  and  commerce  was  a  matter  of 
the  utmost  concern  on  the  part  of  the  great  men 
who  framed  this  Ordinance  and  the  Constitution 
of  the  United  States,  and  the  Jay  treaty  of  1794 
secured  to  the  subjects  of  both  Great  Britain  and 
the  United  States  the  right — 


The  State  and  the  Nation  21 

freely  to  pass  and  repass  by  land  or  inland  navigation 
into  the  respective  territories  and  countries  of  the 
two  parties  on  the  continent  of  America  (the  country 
within  the  bounds  of  the  Hudson  Bay  Co.  only 
excepted),  and  to  navigate  all  the  lakes,  rivers,  and 
waters  thereof,  and  freely  to  carry  on  trade  and  com- 
merce with  each  other. 

The  Ordinance  of  1787  also  made  provision  for 
the  erection  of  States  out  of  the  territory  to  which 
it  applied,  whenever  any  of  such  States  should  have 
60,000  free  inhabitants,  provided  the  permanent 
constitution  and  State  government  which  should 
be  formed  "shall  be  republican  and  in  conformity 
to  the  principles  contained  in  these  articles." 

That  portion  of  the  articles  which  dealt  with 
the  government  of  the  territory,  provided  for  the 
appointment  of  a  court  to  consist  of  three  judges, 
with  common-law  jurisdiction,  and  whose  commis- 
sions should  continue  in  force  during  good  be- 
havior. Among  the  provisions  which  were  declared 
to  be  unalterable  save  by  common  consent  was 
that — 

The  inhabitants  of  said  Territory  shall  always  be 
entitled  to  the  benefits  of  the  writ  of  habeas  corpus 
and  of  the  trial  by  jury,  of  a  proportionate  represen- 
tation of  the  people  in  the  legislature,  and  of  judicial 
proceedings  according  to  the  course  of  the  common 
law. 

The  principles  of  government  embodied  in  the 
Federal  Constitution,   adopted  in   1789,  were  a 


n  The  Changing  Order 

distribution  of  powers  among  three  separate  co- 
ordinate branches — legislative,  executive,  and  ju- 
dicial. The  legislative  power  was  to  be  exercised 
by  representatives  of  the  people,  and  senators  re- 
presenting the  States,  with  the  participation  of  the 
President,  to  the  extent  of  recommending  legisla- 
tion and  exercising  a  qualified  veto  over  measures 
passed  in  Congress.  The  executive  officers  were 
to  be  chosen  for  definite  terms,  and  during  such 
terms  were  to  be  free  from  interference  by  either 
of  the  other  branches  of  government,  save  when 
impeached  for  high  crimes  or  misdemeanors;  and 
the  judicial  power  was  to  be  exercised  by  judges 
holding  office  during  good  behavior  and  free  from 
interference  or  control  by  the  other  branches  of 
government.  An  independent  judiciary  was  re- 
garded by  the  framers  of  the  Constitution  as 
absolutely  essential  to  the  success  of  the  govern- 
ment created  by  it. 

Pursuant  to  the  provisions  of  the  Ordinance,  a 
constitution  was  adopted,  and  the  State  of  Ohio 
was  admitted  into  the  Union  on  March  i, 
1803.  Those  who  prepared  that  constitution 
had  before  them  as  models  and  guides  the  Ord- 
inance for  the  government  of  the  northwestern 
territory,  the  Constitution  of  the  United  States, 
and  the  Jay  treaty.  But  they  were  unable 
to  grasp  the  wisdom  embodied  in  those  famous 
documents. 

Rufus  King,  in  his  sketch  of  the  history  of  Ohio, 
says  of  this  constitution : 


The  State  and  the  Nation  23 

It  was  framed  by  men  of  little  experience  in  matters 
of  state,  and  under  circumstances  unfavorable  to 
much  forecast.  With  such  a  model  of  simplicity  and 
strength  before  them  as  the  national  Constitution, 
which  had  just  been  formed,  the  wonder  is  that  some 
of  its  ideas  were  not  borrowed.  It  seems  to  have  been 
studiously  disregarded,  and  Ohio,  as  well  as  some 
States  farther  westward,  which  her  emigrant  sons, 
with  filial  regard,  induced  to  follow  her  example,  has 
suffered  ever  since  from  a  weak  form  of  government, 
made  up  in  haste  and  apparently  in  mortal  dread  of 
Gov.  St.  Clair.  .  .  .  Briefly  stated,  it  was  a  govern- 
ment which  had  no  executive,  a  half-starved,  short- 
lived judiciary,  and  a  lopsided  legislature. ■ 

The  student  of  American  history  must  con- 
stantly wonder  at  finding  so  often  developed  a 
hostile  attitude  toward  the  judiciary.  Disputes 
which  can  only  be  settled  by  the  arbitrament  of 
independent  and  incorruptible  judges  constantly 
arise  between  citizens,  between  States,  between  a 
State  and  the  nation.  The  existence  of  a  stand- 
ing body  of  judges — men  of  learning  and  character, 
withdrawn  from  the  ordinary  pursuits  of  business 
life,  and  independent  of  all  influences  which  might 
warp  their  judgment  and  prevent  them  from 
reaching  decisions  based  only  upon  the  fair  and 
unbiased  consideration  of  the  law  as  applied  to  the 
evidence  in  the  case — would  seem  to  be  of  such  obvi- 
ous advantage  to  every  member  of  the  community 
that  no  argument  were  needed  to  demonstrate  it. 

1  Ohio,  by  Rufus  King.     Houghton,  Mifflin  &  Co.,  1903. 


24  The  Changing  Order 

Yet  in  the  early  history  of  Ohio,  as  in  the  later 
history  of  some  of  our  present  States  and  Territories, 
from  time  to  time  waves  of  feeling  hostile  to  the 
judicial  establishment  arose,  generally  originating 
in  the  resentment  of  some  class  of  the  community 
to  judicial  decisions  preventing  that  particular 
class  from  carrying  out  schemes  for  its  own  ad- 
vantage, to  the  detriment  of  the  rest  of  the  com- 
munity. 

The  latest  manifestation  of  this  spirit  in  consti- 
tutional provisions  for  the  recall  of  judges  by 
popular  vote,  is,  in  effect,  the  same  as  that  which 
was  resorted  to  in  Ohio  in  1809,  as  a  means  of 
punishing  the  Common- Pleas  judges  who  had 
ruled  that  an  act  of  the  Legislature  granting  to 
justices  of  the  peace  jurisdiction  to  try  suits  for 
any  amount  not  exceeding  $50  without  a  jury,  was 
a  violation  of  the  right  of  trial  by  jury  secured 
by  the  Seventh  Amendment  to  the  Constitution  of 
the  United  States,  in  all  suits  at  common  law  where 
the  value  in  controversy  shall  exceed  twenty 
dollars. 

Although  this  decision  was  affirmed  by  the 
Supreme  Court  of  the  State,  an  effort  was  made  to 
impeach  the  judges  who  rendered  it,  and  when 
this  failed,  resort  was  had,  as  Rufus  King  states  in 
his  history  of  Ohio,  "toa  more  efficacious  course" : 

The  term  of  office  was  seven  years,  and  the  term 
of  seven  years  since  the  State  constitution  went  into 
operation  was  just  expiring.  Most  of  the  judges  had 
been  chosen  much  later,  either  as  new  appointments 


The  State  and  the  Nation  25 

or  to  fill  vacancies.  It  was  resolved  by  the  majority 
in  both  branches  of  the  assembly  that  their  terms  of 
office  must  all  be  limited  by  the  original  term  of  those 
who  had  been  first  appointed.  The  three  supreme 
judges,  three  president  judges  of  the  common  pleas, 
all  the  associate  judges  of  that  court,  more  than  a 
hundred  in  number,  and  all  the  justices  of  the  peace, 
were  discharged  at  a  swoop. x 

The  history  of  Ohio  furnishes  no  repetition  of 
such  an  attack  on  the  independence  of  the  judi- 
ciary as  this,  but  it  was  many  years  before  the 
courts  recovered  from  the  effects  of  this  blow  to 
their  independence.  Not,  indeed,  until  after  the 
decision  by  the  Supreme  Court  of  Ohio,  in  1887, 
that  it  was  empowered  and  in  duty  bound  to 
declare  a  law  invalid  if  not  passed  in  due  consti- 
tutional form,  did  the  judiciary  of  Ohio  take  the 
place  which  that  branch  of  the  government  must 
occupy,  in  order  that  republican  government  as 
it  was  understood  by  the  framers  of  the  Consti- 
tution of  the  United  States  may  be  accomplished. 

Ohio,  in  common  with  many  of  the  other  States, 
had  her  experience  in  resisting  the  supremacy  of 
the  Constitution  of  the  United  States  and  laws 
and  treaties  made  in  pursuance  of  it.  In  18 19 
she  undertook  to  impose  a  tax  on  each  of  the  two 
branches  of  the  United  States  Bank,  and  Osborn, 
the  auditor  of  state,  summarily  took  from  one  of 
the  branches  a  sum  of  money  large  enough  to 
cover  the  tax  on  both.     He  was  advised  by  counsel 

JOhiof  Rufus  King,  p.  314. 


26  The  Changing  Order 

that  as  the  State  could  not  be  sued  by  the  nation 
he  was  secure  from  Federal  redress. 

But  the  supremacy  of  the  national  government 
was  declared,  and  the  insufficiency  of  Osborn's 
defense  demonstrated,  in  an  opinion  by  Chief 
Justice  Marshall,  which  is  one  of  the  great  land- 
marks of  constitutional  law.  The  act  of  the 
Legislature  of  Ohio  under  which  Osborn  proceeded, 
was  declared  to  be  in  conflict  with  the  Federal 
Constitution  and  therefore  void;  consequently 
Osborn's  act  was  not  the  act  of  the  State;  he  was  a 
mere  trespasser,  and  as  such  amenable  to  the  pro- 
cess of  the  Federal  court.1 

Representative  republican  government  is  founded 
upon  a  practical  recognition  of  the  fact  that  in 
a  busy,  prosperous  community  the  average  citizen 
can  give  but  little  time  to  the  details  of  his  gov- 
ernment. He  therefore  joins  with  his  fellow- 
electors  in  selecting  representatives  to  frame  the 
laws  by  which  he  is  to  be  governed,  and  in  choosing 
the  principal  officers  who  are  to  execute  them.  His 
life,  liberty,  and  property  are  protected  from  un- 
due invasion  by  either  branch  of  the  government 
by  means  of  constitutional  restrictions  upon  their 
powers;  and  by  limiting  the  terms  for  which  they 
are  chosen,  there  is  required  of  representatives 
and  agents  alike  a  periodical  account  of  their 
stewardship.  This  system  secures  freedom  from 
undue  interference  during  the  term  of  office,  thus 
affording  a  reasonable  time  to  work  out  any  given 

1  Osborn  v.  U.  S.  Bank,  9  Wheat.,  938. 


The  State  and  the  Nation  27 

problem,  and  to  submit  it  to  the  test  of  experience 
before  it  is  either  approved  or  condemned.  The 
most  beautiful  work  of  the  most  skilled  artisan 
presents  a  crude  and  unlovely  appearance,  prom- 
ising anything  but  perfection,  at  some  stage  of 
its  production,  and  if  the  capacity  of  its  author 
and  the  value  of  the  work  were  determined  at  that 
period,  neither  the  artist  nor  the  work  could  ever 
win  approval. 

Abuses  of  power  occur  under  all  forms  of  govern- 
ment. The  representatives  chosen  to  make  laws 
for  State  or  nation  have  not  always  been  faithful 
to  their  trust.  The  greater  importance  of  the 
national  legislature,  upon  which  the  eyes  of  the 
nation  are  constantly  turned,  has,  as  a  rule,  pre- 
served it  from  the  corruption  and  the  inefficiency 
of  many  of  the  State  legislatures.  The  history 
of  the  latter  has  been  too  often  a  history  of  venality 
and  stupidity.  But  is  the  remedy  to  be  found  in 
the  overthrow  of  the  whole  system  of  representative 
government?  If  the  head  of  a  large  commercial 
establishment  should  discover  that  his  clerks  and 
officials  had  disobeyed  his  instructions,  stolen  his 
money,  and  impaired  his  fortune,  would  he  mend 
the  case  by  undertaking  to  do  all  their  work  him- 
self, or  by  so  hampering  his  new  employees  with 
restrictions  and  penalties  and  threats  of  instant 
dismissal  for  apparent  offenses,  that  their  only 
certainty  in  not  offending  would  lie  in  doing 
nothing?  Can  public  business  be  carried  on  by  a 
system  based  on  distrust,  any  better  than  private 


28  The  Changing  Order 

business  can  be  successfully  so  conducted?  Is  not 
the  remedy  to  be  found  rather  in  greater  care  in 
the  selection  of  agents  and  the  more  rigid  enforce- 
ment of  their  responsibilities?  Political  and  social 
reformers  alike  are  prone  to  advocate  the  over- 
throw of  a  system  rather  than  the  more  difficult 
task  of  selecting  fit  agents  to  carry  on  government. 
How  can  any  man  who  gives  the  subject  a 
moment's  reflection  view  with  indifference  any 
interference  with  the  dignity  and  independence 
of  the  judiciary?  What  are  judges  but  impartial 
arbitrators,  to  whom  any  one  may  be  compelled 
at  any  moment  to  turn  for  protection  of  life,  limb, 
or  property?  What  will  become  of  that  protection 
if  our  system  of  government  should  subject  him 
to  the  despoiling  rage  of  the  mob,  when  he  asserts 
the  supremacy  of  law  in  the  face  of  unjust  clamor? 
Who  will  be  secure  in  life  or  property,  if  judges  only 
can  retain  their  places  by  consulting  the  passing 
fever  of  the  crowd,  instead  of  the  laws  of  the  land? 
A  glib,  cheap  answer  is  made  by  the  advocates 
of  the  destruction  of  representative  government 
when  objection  is  made  to  their  schemes:  "You 
do  not  trust  the  people,"  they  say.  On  the  con- 
trary, it  is  they  who  do  not  trust  the  people. 
Their  whole  program  is  based  on  the  assumption 
that  the  people  are  unfit  or  unable  to  choose  honest 
and  faithful  representatives,  and  therefore  that 
those  whom  they  do  select  must  be  fettered  with 
minute  instructions,  deprived  of  any  freedom  of 
action,  subject  to  recall,  and  to  be  cast  out  a 


The  State  and  the  Nation  29 

once  if  they  do  not  photograph  into  instant  action 
every  passing  wave  of  popular  feeling  which  may 
be  worked  up  as  a  result  of  misinformation  or 
inflamed  prejudice.  Under  such  a  system,  the 
people  abandon  all  self-restraint  and  the  necessity 
of  sober  second  thought,  based  on  accurate  infor- 
mation and  thorough  discussion,  before  condemn- 
ing their  servants.  It  would  seem  an  affront  to 
intelligent  readers  to  suggest  even  the  possibility 
of  such  a  change  in  the  nature  of  our  governments, 
State  or  national,  were  it  not  that  in  some  of 
the  Western  States  and  Territories  such  theories 
have  already  found  expression  in  constitutions  and 
laws;  and  even  in  our  Eastern  States,  there  are 
not  lacking  those  who  have  seized  upon  those  no- 
tions as  a  gospel  which  is  to  bring  salvation  as 
to  a  people  sitting  in  darkness. 

Indeed,  these  ideas  seem  to  have  gained  such  cur- 
rencyin  some  partsof  the  country ,  that  oneis  tempted 
to  exclaim,  in  the  language  of  James  Russell  Lowell : 

Is  this  the  country  that  we  dreamed  in  youth, 
When  wisdom  and  not  numbers  should  have  weight, 
Seed  field  of  simpler  manners,  braver  truth, 
Where  shams  should  cease  to  dominate 
In  household,  church,  and  state? 

But  if  we  reflect  on  the  history  of  our  country, 
we  must  realize  that  its  people  are  "the  heirs  of 
wise  tradition's  widening  cautious  rings,"  and  that 
in  the  long  run  they  never  yet,  as  a  nation,  have 
proved  unworthy  of  their  birthright. 


Ill 

COLLEGE  MEN  AND  PUBLIC  QUESTIONS1 

1  ASSUME  that  when  you  invited  me  to  be  your 
guest  this  evening  you  expected  me  to  talk  to 
you  about  the  relations  of  college  men  to  public 
questions.  As  one  busied  in  the  tremendously  im- 
portant and  equally  absorbing  business  of  govern- 
ment, I  am  greatly  interested  in  meeting  you  who 
are  coming  out  into  the  workaday  world  to  assume 
your  share  of  the  duty  and  the  privilege  of  making 
efficient  the  conduct  of  our  public  affairs,  municipal, 
State,  and  national. 

To  be  truly  efficient,  a  government  must  be 
administered  honestly  and  wisely.  How  these 
results  shall  be  accomplished,  you  and  men  like 
you  should  in  large  measure  determine.  If  you 
do  not  play  an  important  part  in  the  solution  of 
this  problem,  then,  whatever  proficiency  you  may 
have  attained  here  in  your  studies,  whatever 
prowess  you  may  have  displayed  in  athletic  sports, 
you  will  have  failed  to  realize  the  highest  aim  of 
university  education. 

1  Address  at  the  annual  banquet  of  The  Daily  Princetonian, 
Princeton,  N.  J.f  May  i,  191 1. 

30 


College  Men  and  Public  Questions  31 

I  congratulate  you  on  coming  out  into  the  world 
at  this  particular  time  in  its  history.  Within 
your  grasp  is  life,  and  life  abundantly.  In  the 
words  of  the  Psalmist,  your  feet  are  planted  in  a 
large  room.  The  world  is  all  before  you,  where  to 
choose.  When  your  fathers  were  graduated  at  the 
university  thirty-odd  years  ago,  the  thoughts  of  the 
people  were  centered  principally  upon  industrial 
and  business  activity.  The  railroads  were  open- 
ing up  the  great  western  country  for  development ; 
mining  and  manufacture  were  being  stimulated 
by  new  inventions  and  increased  facilities  of 
transportation,  leading  to  cheapened  production 
and  improved  product;  and  the  rapid  progress  in 
facilities  of  intercommunication  of  thought  were 
bringing  the  ends  of  the  earth  into  closer  touch 
with  each  other.  The  surplus  population  of  Eu- 
rope poured  into  our  country,  and  brawny  arms 
from  many  lands  developed  our  mines  and  carried 
on  the  work  of  our  factories.  Plenty  was  scat- 
tered over  a  smiling  land.  The  way  was  open 
for  every  one.  If  the  older  communities  were  too 
crowded,  there  was  room  for  all  in  the  great  West. 
Industry  and  enterprise  and  intelligence  found 
ample  scope;  wealth  was  garnered  in  many  fields. 
The  power  of  cooperation  and  organization  in  the 
conduct  of  business  has  been  applied  during  the 
past  thirty  years  to  an  extent  never  before  dreamed 
of.  Men  learned  then  how  far-reaching  a  control 
over  industry  and  commerce  could  be  effected 
through  organization.     Commercial  empires  were 


32  The  Changing  Order 

formed.  Great  fortunes  were  amassed  in  the 
hands  of  a  few,  but  prosperity  came  also  to  many. 
What  wonder  that  materialism  became  rampant 
and  that  the  golden  calf  was  erected  for  worship 
in  the  market-places ! 

But  the  vision  of  truth  and  justice  has  never 
wholly  failed  before  the  eyes  of  the  American 
people,  and  in  the  full  flush  of  their  highest  pros- 
perity they  heard  the  voice  of  the  national  con- 
science reminding  them  that  righteousness  alone 
exalteth  a  nation.  In  the  period  of  their  greatest 
material  progress,  they  paused  to  consider  whether 
their  institutions  were  securing  justice  between 
man  and  man. 

The  laws  of  State  and  nation  alike  during  this 
period  of  great  industrial  progress  were  molded 
to  facilitate  the  conduct  of  business  on  a  colossal 
scale.  There  was  nothing  more  natural.  They 
met  the  needs  of  the  hour.  True,  they  went  be- 
yond those  needs,  and,  in  so  doing,  they  aroused 
the  people  to  a  recognition  of  the  fact  that  they 
had  gone  too  far.  In  the  triumphal  progress  of 
expanding  industry  and  accumulating  wealth,  the 
rights  of  individuals  and  of  classes  of  individuals 
who  had  but  an  humble  share  in  it  were  not  always 
considered.  Here  and  there  occasional  peaks  of 
garnered  riches  rose  high  above  the  plain,  and  like 
the  robber  barons  of  the  Rhineland,  great  masters 
of  capital  sat  enthroned  upon  them.  But  their 
very  height  lifted  them  up  where  all  men  could  see 
and  begin  to  question  how  they  came  there,  and 


College  Men  and  Public  Questions  33 

whether  it  was  for  the  common  weal  that  such 
inequalities  of  condition  should  exist. 

So  to-day,  the  great  question  confronting  you 
as  you  enter  upon  the  drama  of  matured  life  is  to 
find  the  means  of  maintaining  the  true  balance 
between  the  freedom  which  the  individual  citizen 
must  enjoy  in  order  that  he  may  justly  prosper, 
and  the  protection  of  the  mass  of  the  people  from 
unjust  discrimination  in  favor  of  the  few. 

In  a  country  whose  government  is  based  on  man- 
hood suffrage,  any  abuse  can  continue  only  until 
a  majority  of  the  people  are  convinced  that  it  is 
wrong.  Then  there  is  bound  to  be  a  change.  But 
whether  or  not  the  change  proposed  to  remedy  the 
evil  is  a  wise  one  and  will  not  result  merely  in 
jumping  out  of  the  frying-pan  into  the  fire,  depends 
upon  whether  or  not  the  remedy  is  sufficiently 
discussed  to  be  thoroughly  understood.  The 
first  popular  impulse  to  right  a  wrong  often  results 
in  committing  another  wrong.  It  is  in  putting 
clearly  before  the  people  the  nature  of  civic  ills, 
and  the  character  and  effect  of  proposed  reme- 
dies, that  men  who  have  had  the  benefit  of  sys- 
tematic university  training  may  best  justify  their 
advantages. 

Public  attention  has  been  and  now  is  focused 
on  these  wrong  tendencies.  Recognizing  the 
existence  of  evils,  two  classes  of  remedies  are  pre- 
sented. One  class  deals  with  forms  of  govern- 
ment and  new  rules  of  conduct,  another  class 
addresses  itself  to  a  consideration  of  the  character 


34  The  Changing  Order 

of  the  men  who  make  our  laws  and  carry  on  our 
public  affairs.  It  is  characteristic  of  our  race 
that  we  are  more  prone,  in  the  face  of  civic  ills, 
to  the  making  of  new  laws  than  to  securing  a  better 
class  of  public  servants.  We  pass  laws  very  much 
as  the  Chinese  buy  a  paper  prayer  and  hang  it  up 
to  placate  their  gods.  A  common  expression  on 
many  lips  is  "there  ought  to  be  a  law  about  that." 
We  are  in  truth  a  law-ridden  people;  and  this 
tendency  is  encouraged  and  stimulated  by  those 
who  seek  popular  favor  by  pointing  to  easy  reme- 
dies for  obvious  ills.  Not  satisfied  with  the  ever- 
swelling  volume  of  statute  laws,  we  are  now  urged 
to  tinker  with  our  constitutions.  There  is  nothing 
new  in  this  kind  of  demagoguery.  Mommsen, 
writing  of  the  Rome  of  Cato's  time,  says: 

In  reality  these  demagogues  were  the  worst  enemies 
of  reform.  While  the  reformers  insisted  above  all 
things  and  in  every  direction  on  moral  amendment, 
demagogism  preferred  to  insist  on  the  limitations  of 
the  powers  of  the  government  and  the  extension  of 
those  of  the  burgesses. 

So  in  our  own  day,  there  is  much  clamorous 
advocacy  of  measures  to  limit  the  powers  of  those 
charged  with  the  administration  of  our  highly 
complicated  government,  and  to  increase  the 
direct  intervention  of  the  public  in  the  conduct  of 
its  operations. 

The  idea  that  a  busy,  prosperous,  commercial 
people  will,  or  can,  make  or  administer  laws  better 


College  Men  and  Public  Questions  35 

than  representatives  chosen  from  among  the  people 
for  the  purpose,  is  one  that  is  almost  as  old  as 
recorded  history,  and  all  recorded  history  proves 
its  fallacy.  But  it  is  said  that  in  the  workings  of 
representative  government,  representatives  do  not 
represent  the  people.  I  believe  that  to  be  a 
superficial  comment.  Representatives  have  and, 
being  human,  always  will,  from  time  to  time  fail 
in  their  duty ;  but  in  the  long  run,  our  representative 
bodies  must  and  do  give  expression  to  precisely 
what  the  matured  thought  of  the  majority  of  the 
people  demands.  They  may  not  yield  at  once  to 
a  spasmodic  and  artificially  stimulated  emotion 
induced  by  one  particular  class  of  society  for  its 
own  ends  as  against  all  other  classes.  God  forbid 
that  they  should!  But  they  are  inevitably  con- 
trolled in  the  long  run  by  the  deliberate  thought- 
out  will  of  the  people.  Impatient  reformers, 
desirous  of  securing  the  prestige  of  immediate 
success  in  the  advocacy  of  their  nostrums,  chafe 
at  delays.  But  you,  who  have  had  the  advantage 
of  learning  the  lessons  of  the  past,  will,  I  am  con- 
fident, lend  your  influence  to  the  maintenance  of 
a  system  of  government  which  protects  the  legiti- 
mate interests  of  a  commercial  people  from  de- 
struction by  the  sudden  gusts  of  popular  passion. 
You  will  carefully  examine  existing  laws  and 
institutions  before  lending  your  aid  to  their 
overthrow.  No  system  of  law  can  be  devised 
that  automatically  will  work  good.  All  laws  must 
be  administered  by  human  agencies.      The  best 


36  The  Changing  Order 

human  agencies  can  only  be  secured  by  attaching 
confidence  and  honor  and  dignity  to  the  office.  A 
few  laws  easily  understood  are  of  more  value 
than  a  thousand  laws  impossible  of  comprehen- 
sion. Remember  the  advice  that  Don  Quixote 
gave  to  Sancho  Panza  for  his  guidance  in  the 
government  of  the  island  of  Barataria: 

Make  not  many  proclamations;  but  those  thou 
makest  take  care  that  they  be  good  ones,  and  above 
all  that  they  be  observed  and  carried  out ;  for  procla- 
mations that  are  not  observed  are  the  same  as  if  they 
did  not  exist;  nay,  they  encourage  the  idea  that  the 
prince  who  had  the  wisdom  and  authority  to  make 
them  had  not  the  power  to  enforce  them;  and  laws 
that  threaten  and  are  not  enforced  come  to  be  like 
the  log,  the  king  of  the  frogs,  that  frightened  them  at 
first,  but  that  in  time  they  despised  and  mounted 
upon. 

A  people  as  numerous  as  ours  cannot  as  a  body 
lay  aside  their  business  occupations  and  meet  in 
the  market-places,  like  the  Athenians,  to  debate 
on  matters  of  public  concern,  and  to  enact  into 
law  or  executive  order  the  result  of  their  delibera- 
tions. Industry  and  commerce  will  long  continue 
to  engross  the  attention  of  the  majority.  As 
education  continues  to  be  widespread,  it  is  to  be 
expected  that  the  people  will  take,  increasingly, 
an  active,  intelligent  interest  in  public  affairs. 
But  the  business  of  governing  a  highly  complex 
modern  civilization,  so  as  to  ensure  the  best  results 


College  Men  and  Public  Questions  37 

to  the  greatest  number,  will  always  require  the 
absolute  devotion  and  entire  attention  of  a  large 
number  of  men.  Temporary  abuses  may  be  cor- 
rected, but  continuously  effective  government 
cannot  be  conducted  through  the  spasmodic  inter- 
vention of  popular  uprisings.  Nor  can  competent 
men  for  the  conduct  of  public  affairs  be  secured 
if  they  are  to  be  commissioned  as  untrustworthy, 
subjected  to  constant  misrepresentation,  and 
liable  to  be  turned  out  branded  as  unfaithful 
servants  at  a  moment's  notice  for  temporarily 
unpopular  acts. 


IV 

PALIMPSESTS1 

IN  extending  to  me  the  invitation  of  your  Club 
to  be  its  guest  this  evening,  your  President 
neglected  to  furnish  me  with  a  definite  statement 
of  the  aims  and  objects  of  the  Club,  or  the  record 
of  its  accomplishments,  leaving  me  to  infer  from 
the  name  you  bear,  the  character  of  the  interests 
which  unite  you  in  this  organization.  I,  therefore, 
have  been  left  to  speculate  as  to  whether  or  not 
you  devote  your  meetings  to  the  study  of  paleo- 
graphy, reading  the  photographic  copies  of  famous 
palimpsests  which  are  now  sent  anywhere  by  the 
great  libraries  of  Europe  for  the  convenience  of 
scholars  in  other  lands,  or  if  the  name  of  your 
Club  is  merely  a  figurative  suggestion  of  broader 
human  interests,  leading  into  fields  of  history  and 
philosophy,  far  beyond  the  mere  deciphering  of 
ancient  writings. 

I  have  preferred  to  adopt  the  latter  theory,  and 
to  assume  that  your  palimpsests  are  the  leaves  in 
the  great  book  of  human  history,  which  each  genera- 

1  Address  before  the  Palimpsest  Club,  Omaha,  Neb.,  Oct.  16, 
1911. 

38 


Palimpsests  39 

tion  seeks  in  part  to  read  for  its  own  edification, 
and  in  part  to  wipe  clear  of  the  records  of  previous 
ages,  in  order  that  it  may  write  its  own  story  upon 
them. 

The  scribes  of  the  early  Christian  centuries 
sought  to  erase  from  the  parchment  and  vellum, 
which  then  were  limited  in  quantity  and  costly 
to  procure,  the  earlier  writings  which  they  bore, 
without  thought  or  care  that  these  discarded 
records  might  be  of  infinitely  more  worth  to 
humanity  than  those  for  which  they  had  to  make 
room.  They  sought  to  expunge  the  thrilling 
tales  of  Troy's  siege — that  wide  expanse  "That 
deep-brow' d  Homer  ruled  as  his  demesne";  the 
treatise  on  the  Republic,  which  preserves  to  us  a 
knowledge  of  the  political  acumen  of  Rome's 
greatest  orator;  early  Greek  versions  of  the  Chris- 
tian gospels  and  epistles;  that  work  which  has 
made  the  name  of  Euclid  synonymous  with  Mathe- 
matics, and  many  other  works  of  lasting  value; 
and  they  covered  the  pages,  once  glowing  with 
the  immortal  language  of  Homer,  Cicero,  John, 
Luke,  or  Paul,  with  the  dry-as-dust  scribblings 
of  an  Ephraem  Syrus  and  a  Severus  of  Antioch. 

But  great  ideas,  once  recorded,  seldom  perish! 
Eternal  truths  survive;  and  the  destructive  work 
of  these  pedants  failed  in  its  purpose,  for  what 
they  wrote  was  forgotten,  while  from  under  the 
overlay  of  tedious  monastic  dialectics  and  incom- 
prehensible verbiage,  the  eager,  thirsty  students 
of  "the  new  learning"  uncovered  the  records  of 


40  The  Changing  Order 

The  glory  that  was  Greece 

And  the  grandeur  that  was  Rome. 

Their  discoveries  awakened  the  mind  of  Europe, 
as  the  sunshine  opens  the  flowers.  In  the  words 
of  Symonds,  the  Renaissance  wrought 

the  recovery  of  freedom  for  the  human  spirit  after  a 
long  period  of  bondage  to  oppressive  ecclesiastical 
and  political  orthodoxy — a  return  to  the  liberal  and 
practical  conceptions  of  the  world  which  the  nations 
of  antiquity  had  enjoyed,  but  upon  a  new  and  enlarged 
platform. 

That  rediscovery  of  the  classic  past  restored  the 
confidence  in  their  own  faculties  to  men  striving  after 
spiritual  freedom,  revealed  the  continuity  of  history 
and  the  identity  of  human  nature  in  spite  of  diverse 
creeds  and  different  customs;  held  up  for  emulation 
master  works  of  literature,  philosophy  and  art;  pro- 
voked inquiry ;  encouraged  criticism ;  shattered  the  nar- 
row mental  barriers  imposed  by  mediaeval  orthodoxy. 

From  these  records  of  the  splendid  development 
of  the  Greek  and  Roman  intellect,  and  its  keen 
appreciation  of  what  was  most  beautiful  in  nature 
and  most  attainable  in  art,  the  modern  European 
mind  was  quickened  into  an  activity  whose  impulse, 
projected  across  four  centuries,  now  stimulates 
what  is  best  and  most  vital  in  the  thought  of  our 
own  time  in  our  own  country. 

Emerson  says: 

The  advancing  man  discovers  how  deep  a  property 
he  hath  in  all  literature,  in  all  fable,  as  well  as  in  all 


Palimpsests  41 

history.  He  finds  that  the  poet  was  no  odd  fellow 
who  described  strange  and  impossible  situations,  but 
that  universal  man  wrote  by  his  pen  a  confession  true 
for  one  and  true  for  all.  His  own  secret  biography  he 
finds  in  lines  wonderfully  intelligible  to  him,  yet  dotted 
down  before  he  was  born. 

It  is  only  when  we  come  to  realize  that  the  men 
who  in  long-gone-by  days  "fought  and  sailed  and 
ruled  and  loved  and  made  our  world"  were  men 
like  us;  that  their  joys  and  sorrows,  their  triumphs 
and  defeats,  were  such  as  we  suffer  and  enjoy,  and 
that  the  record  of  their  thoughts  and  actions  is 
but  a  chapter  in  our  own  history,  musing  upon 
which  we  may  take  note  of  our  own  dangers, 
find  solutions  for  our  own  problems  in  this  our 
day  and  generation,  and  say, 

The  future  I  may  face,  now  I  have  proved  the  past. 

How  extraordinarily  modern  and  human  and 
real,  for  example,  the  Romans  of  the  second  century 
become  as  we  read  the  letter  of  Pliny  the  younger 
to  the  Emperor  Trajan,  written  while  the  former 
was  proconsul  in  Bithynia,  in  which  he  tells  of  a 
fire  that  had  broken  out  at  Nicomedia,  and  con- 
sumed not  only  several  private  houses,  but  also 
two  public  buildings,  the  town  house  and  the 
temple  of  Isis,  though  they  stood  on  opposite 
sides  of  the  street.     He  says: 

The  occasion  of  its  spreading  so  far  was  partly  owing 
to  the  violence  of  the  wind  and  partly  to  the  indolence 


\2  The  Changing  Order 

of  the  people.  .  .  .  The  truth  is,  the  city  was  not 
provided  either  with  engines,  buckets,  or  any  one 
single  instrument  to  extinguish  fires. 

He  then  unfolds  to  Trajan  a  plan  to  organize  a 
permanent  fire  company,  consisting  of  one  hundred 
and  fifty  members.     He  says: 

I  will  take  care  that  the  privileges  granted  them 
shall  not  be  extended  to  any  other  purpose.  As  this 
incorporated  body  will  consist  of  so  small  a  number, 
it  will  be  easy  enough  to  keep  them  under  proper 
regulation. 

But  Trajan  put  no  faith  in  the  abilities  of  even 
so  keen-minded  and  vigilant  a  governor  as  Pliny 
to  confine  the  activities  of  such  a  company  within 
its  chartered  powers.  Public  Service  Commissions 
had  not  yet  been  invented.     He  wrote  in  reply : 

....  it  is  to  be  remembered  that  this  sort  of  socie- 
ties have  greatly  disturbed  the  peace  of  that  province 
in  general,  and  of  those  cities  in  particular.  Whatever 
name  we  give  them,  and  for  whatever  purposes  they 
may  be  founded,  they  will  not  fail  to  form  themselves 
into  assemblies,  however  short  their  meetings  may  be. 
It  will  therefore  be  safer  to  provide  such  machines  as 
are  of  service  in  extinguishing  fires,  enjoining  the  own- 
ers of  houses  to  assist  upon  such  occasions,  and  if  it 
shall  be  necessary,  to  call  in  the  help  of  the  populace!1 

It  would  seem  as  if  Trajan  must  have  had  a 
prophetic  vision  of  the  famous  Moyamensing  hose- 

1  Melmoth's  Pliny \  vol.  ii.,  pp.  620-22. 


Palimpsests  43 

company  of  our  American  Philadelphia,  and  as  if, 
even  in  far-off  Asia  Minor,  eighteen  hundred  years 
ago,  corporations  were  apt  to  exceed  their  char- 
tered rights,  and  to  reach  out  to  exercise  powers 
not  expressly  granted  to  them — a  tendency  which 
has  been  at  times  observed  of  incorporated  bodies 
in  later  days! 

The  fear  of  the  tumult  which  Trajan  seemed  to 
think  incident  to  assemblies  of  members  of  the 
corporation  "however  short  their  meetings  may 
be,"  was  like  the  dread  the  rulers  of  France  had  of 
the  consequences  of  calling  together  the  States- 
General  in  1789.  Self-restraint  in  nations,  as 
well  as  in  individuals,  is  the  result  of  the  exercise 
of  regulated  freedom,  of  liberty  under  law.  It  is 
not  the  product  of  centuries  of  tyranny.  It  can 
only  be  acquired  by  practice. 

But  the  study  of  our  palimpsests  suggests  an- 
other thought;  and  that  is,  that  before  we  seek 
to  wipe  out  what  has  been  written  on  the  books  of 
human  experience  by  those  who  have  gone  before 
us,  we  should  first  carefully  read,  consider,  and 
make  sure  that  what  we  propose  to  substitute  is 
really  better  than  what  we  would  destroy.  There 
is  a  certain  presumption  arising  from  age  alone — 
not  an  irrebuttable  presumption,  to  be  sure;  but 
institutions  which  have  stood  the  test  of  an  hun- 
dred years  or  more  are  entitled  to  be  considered 
presumptively  good  for  much  longer,  unless  the 
evidence  is  very  clear  that  they  have  broken  down 
under  the  strain  of  new  burdens  which  advancing 


44  The  Changing  Order 

time  has  imposed  upon  them.  When  automobiles 
came  into  general  use,  it  was  not  thought  neces- 
sary to  depress  the  roads  and  carry  them  by 
tunnel  under  all  intersecting  streams;  we  merely 
strengthened  the  bridges  so  they  would  bear 
the  increased  weight.  Growth  by  modification 
and  adaptation,  rather  than  by  staccato-like 
inventions,  is  the  safest  progress  for  human 
institutions. 

Man  is  said  to  be  the  only  animal  that  profits 
by  the  experience  of  others.  Sometimes  it  would 
appear  as  if  he  were  not  entitled  to  this  distinction. 

Emerson  says: 

All  history  becomes  subjective;  in  other  words 
there  is  no  history,  only  biography.  Every  soul  must 
know  the  whole  lesson  for  itself — must  go  over  the 
whole  ground.  What  it  does  not  see,  what  it  does 
not  believe,  it  will  not  know. 

But  a  wise  generation  will  endeavor  to  avoid 
repeating  experiments  which  previous  history  has 
demonstrated  to  be  doomed  to  failure.  The 
meeting  of  the  States-General  in  France  in  1789 
brought  together  a  great  body  representative  of 
the  different  classes  of  the  French  people.  They 
were  almost  all  inexperienced  in  the  science  of 
government.  They  were  wholly  inexperienced  in 
legislation.  Nearly  two  centuries  had  elapsed 
since  the  representatives  of  the  three  estates  of 
the  realm  had  met  to  discuss  measures  affect- 
ing the  nation.     The  delegates  to  the  National 


Palimpsests  45 

Assembly  of  1789  were  therefore  at  best  mere 
theorists.  They  were  guided  by  philosophical 
hypotheses,  unaided  by  experience.  They  were  all 
too  familiar  with  evils  and  abuses.  They  resorted 
to  philosophy  and  speculation — not  history — for 
remedies.  They  proposed  to  enact  into  law  the 
wildest  Utopian  dreams.  They  conceived  of  man 
(that  is,  the  abstract  political  man  who  was  to  be 
the  unit  of  control  in  the  new  state  they  dreamt 
of)  as  possessed  of  the  most  exalted  virtues,  and 
of  a  wisdom  which  sprang,  like  Minerva,  full 
armored  from  the  head  of  Jove.  Being  endowed 
by  nature  with  virtue  and  wisdom,  he  needed  but 
the  opportunity  to  decide,  in  order  that  he  should 
direct  the  state  along  the  paths  of  justice  to  success 
in  protecting  life  and  property  at  home,  and  in 
sustaining  the  honor  of  the  nation  abroad.  This 
virtue  was  not  found  in  the  chosen  representatives 
of  the  people,  but  only  in  the  individual  when  he 
acted  as  an  elector  in  exercising  direct  popular 
sovereignty.  Therefore,  the  nation  must  in  its 
aggregate  capacity  make  its  own  laws,  determine  all 
controversies,  and  initiate  and  control  all  actions 
which  the  exigencies  of  national  existence  might 
require.  What  the  people  willed  at  any  moment 
must  become  at  once  the  rule  of  action  for  the 
commonwealth.  Representatives  of  the  people 
suffered  a  loss  of  virtue  by  being  detached  from 
the  mass  to  perform  especial  functions.  At  best, 
they  should  serve  only  as  a  large  committee  to 
suggest  to  the  whole  body  of  the  people  the  prob- 


46  The  Changing  Order 

lems  which  the  people  would  then  solve.  They 
must  be  under  the  direct  control  of  the  popular 
will,  or  they  would  cease  to  be  truly  repre- 
sentative of  the  people.  There  was  no  God  but 
Reason,  and  Rousseau  and  Tom  Paine  were  his 
prophets ! 

And  after  they  had  hurried  from  one  excess  to 
another,  had  killed  their  monarchs  and  every 
leader  who  for  a  brief  while  stood  forward  as  the 
chief  exponent  of  the  prevailing  theories — Robes- 
pierre, Danton,  Marat,  Joubert — and  an  hundred 
others  of  lesser  note,  and  had  demonstrated  the 
utter  insecurity  of  life,  liberty,  and  property  under 
such  a  system,  a  military  absolutism  was  erected 
on  the  ashes  of  unrestrained  democracy. 

Again,  in  1848,  after  the  revolution  of  July,  the 
poets  and  philosophers  attempted  to  conduct  the 
government  of  France  on  the  basis  of  unrestricted 
and  immediate  control  of  the  government  by  the 
popular  will.  This  time  the  experiment  was  of 
shorter  duration,  and  nearly  twenty  years  of  the 
empire  of  Louis  Napoleon  followed. 

But  back  in  1787,  there  gathered  together  in 
America  a  body  of  men  of  different  caliber.  They 
had  won  liberty,  and  they  were  resolved  it  should 
not  degenerate  into  license.  They  conceived  of  a 
government  which  should  be  adequate  to  the 
protection  of  life,  liberty,  and  property  at  home, 
and  should  command  respect  abroad.  They  took 
the  philosophical  theories  of  the  time  and  applied 
to  them  the  touchstone  of  history.     They  rejected 


Palimpsests  47 

Jean  Jacques  Rousseau  and  Tom  Paine,  and 
adopted  the  principles  of  Magna  Charta,  and  the 
Bill  of  Rights.  Dealing  with  theories  of  govern- 
ment on  the  basis  of  examining  all  things,  holding 
fast  that  was  best,  they  refrained  from  adopting 
those  institutions  which  experience  in  the  past  had 
demonstrated  to  be  fraught  with  peril  to  freedom, 
however  attractive  they  might  seem  as  abstract 
philosophical  theories.  Without  the  demonstra- 
tion which  the  experience  of  the  French  nation 
was  shortly  to  furnish,  they  distrusted  the  practica- 
bility of  the  doctrines  of  Rousseau  and  the  Ency- 
clopedists. They  found  more  useful  and  robust 
suggestion  in  Montesquieu's  famous  Esprit  des 
Lois,  They  turned  to  the  history  of  popular 
government  in  the  past — in  Greece  and  in  Rome — 
and  in  their  plan  of  a  government  which  was  to 
secure  the  blessings  of  liberty  to  themselves  and 
their  posterity,  they  carefully  guarded  against 
those  opportunities  for  self-destruction  which  had 
proved  the  ruin  of  the  republics  and  democracies 
of  the  older  world. 

As  one  reads  the  inadequate  record  of  their  delib- 
erations, one  is  filled  with  wonder  and  admiration 
at  the  evidence  of  their  thorough  familiarity  with 
the  history  of  governments  in  the  past,  and  at 
their  prescience  in  respect  of  the  future.  They 
were  at  pains  to  save  their  country  from  the  dis- 
asters which  past  history  demonstrated  had  ever 
attended  upon  popular  forms  of  government. 
They  never  lost  sight  of  the  fact  that  a  people  is 


48  The  Changing  Order 

but  an  aggregation  of  individual  men,  and  that  if 
a  government  by  the  people  is  to  be  successful 
and  lasting,  it  must  contain  within  itself  some 
means  of  protecting  the  whole  people  from  the 
follies  or  weaknesses  or  ignorance  of  a  minority 
who,  under  the  impulse  of  temporary  emotion, 
may  draw  to  themselves  enough  support  to  ac- 
complish what  reflection  and  sober  second  thought 
would  demonstrate  to  be  an  injustice,  but  which 
might  be  discovered  too  late  to  prevent  irretriev- 
able mischief. 

So  they  devised  a  scheme  of  representative 
republican  government,  with  a  distribution  and 
balance  of  powers,  so  adjusted  that  it  can  never 
fail  to  respond  to  the  real  deliberate  judgment  of 
the  people,  but  which  is  strong  enough  to  protect 
the  commonwealth  from  the  effect  of  temporary 
impulse,  resulting  from  misinformation,  passion, 
or  prejudice.  They  conceived  of  a  government 
which  would  be  dignified  and  respected,  in  which 
the  whole  people  would  be  represented,  and  which 
should  be  controlled  and  directed  by  the  best 
thought  and  highest  ideals  of  the  people.  Their 
experience  in  the  colonial  governments  had  taught 
them  the  great  advantage  of  establishing  a  govern- 
ment on  certain  fundamental  outlines  contained 
in  a  written  constitution  which  should  represent 
the  deliberate  will  of  the  whole  people,  and  which 
should  limit  and  control  the  action  of  the  repre- 
sentatives of  the  people  in  making,  interpreting, 
and  enforcing  the  laws.     This  constitution,  they 


Palimpsests  49 

provided,  should  be  altered  only  by  the  affirmative 
act  of  a  real  majority  of  the  whole  people.  They 
did  not  leave  it  to  be  the  sport  of  a  minority, 
taking  advantage  of  the  apathy  of  the  majority. 
It  was  to  be  the  settled  government  of  all,  until 
a  secure  majority  of  all  should  affirmatively  and 
deliberately  determine  to  change  it.  By  these 
means  they  secured  for  the  nation  the  benefits 
of  that  self-restraint  which  in  nations,  as  in  indi- 
viduals, coupled  with  self-knowledge  and  self- 
reverence,  lends  life  to  sovereign  power.  Their 
government  was  a  growth — a  continuity  of  the  in- 
stitutions which  the  hardy,  upright,  self-respecting 
men  of  the  American  Colonies  had  worked  out  for 
the  preservation  of  that  liberty  and  independence 
which  to  them  was  dearer  than  property  or  life. 

It  was  the  product  of  the  best  thought  and  the 
highest  statesmanship  of  the  American  people. 
The  civilized  world  has  done  homage  to  their 
learning,  their  wisdom,  and  their  practical  common 
sense.  While  the  institutions  established  by  the 
Constitution  of  the  United  States  thus  far  have 
resisted  the  recrudescence  of  the  theories  of  the 
philosopher  of  Geneva,  and  his  modern  disciples 
of  Oregon  and  Oklahoma,  they  have  been  found 
sufficiently  elastic  to  adapt  themselves  to  the 
changing  needs  of  a  people  whose  numbers  have 
increased  from  three  millions  to  ninety,  and  for 
the  government  of  a  nation  of  forty-six  States,  and 
possessions  beyond  the  seas.  The  cardinal  prin- 
ciples of  the  government  are  simple:  a  nice  balance 


50  The  Changing  Order 

of  powers,  confidence  in  representatives  who  make, 
judges  who  interpret,  and  administrators  who 
execute  the  law;  freedom  from  interference  for  a 
period  adequate  to  enable  them  to  demonstrate 
the  fidelity  with  which  their  tasks  are  discharged ; 
and  accountability  to  the  people  when  this  period 
is  passed. 

But  iconoclasts,  such  as  arise  in  all  ages,  threaten 
the  overthrow  of  this  system.  Already  their  de- 
structive work  has  been  commenced  in  several 
States.  Opposition  to  them  is  sought  to  be  dis- 
credited by  the  cheap  and  ready  cry  that  those 
who  oppose  the  proposed  changes  do  not  trust  the 
people.  The  sponge  and  the  eraser  of  the  eager 
social  reformer  and  the  more  eager  demagogue 
are  set  to  work  on  the  pages  to  which  were  ap- 
pended the  immortal  names  of  Hamilton,  Franklin, 
Madison,  and  Washington.  So  vociferous  are 
these  iconoclasts,  and  so  apathetic  the  friends  and 
supporters  of  constitutional  government,  that  one 
is  tempted  to  share  the  fears  of  Hamilton  that  it 
may  be 

.  .  .  forgotten  that  the  vigor  of  government  is 
essential  to  the  security  of  liberty;  that  in  the  con- 
templation of  a  sound  and  well  informed  judgment, 
their  interest  can  never  be  separated;  and  that  a 
dangerous  ambition  more  often  lurks  behind  the 
specious  mask  of  zeal  for  the  rights  of  the  people  than 
under  the  forbidding  appearance  of  zeal  for  the  firm- 
ness and  efficiency  of  government.  History  will  teach 
us  that  the  former  has  been  found  a  much  more  cer- 


Palimpsests  51 

tain  road  to  the  introduction  of  despotism  than  the 
latter,  and  that  of  those  men  who  have  overturned  the 
liberties  of  republics,  the  greatest  number  have  begun 
their  career  by  paying  an  obsequious  court  to  the 
people;  commencing  demagogues  and  ending  tyrants. 

To  an  American  of  to-day,  the  suggestion  of  an 
individual  tyrant  accomplishing  the  overthrow  of 
liberty  in  this  country  seems  grotesquely  absurd 
and  impossible.  But  the  overthrow  of  representa- 
tive republican  government  of  the  type  estab- 
lished by  the  Constitution  of  the  United  States, 
and  by  those  of  practically  all  the  States  of  the 
Union  until  a  very  recent  date,  eliminates  entirely 
the  element  of  protection  of  the  commonwealth 
from  the  immediate  and  disastrous  action  of  an 
organized  and  aggressive  minority;  weakens 
government,  by  making  executive  officers  depend- 
ent entirely  upon  momentary  popular  favor,  and 
results  in  the  destruction  of  all  security  of  property 
and  liberty,  by  creating  a  spineless  and  servile 
judiciary.  Even  the  worst  individual  tyrant  has 
limitations  to  his  rapacity  and  his  cruelty.  But 
an  unrestrained  populace,  stimulated  by  strong 
emotion,  knows  no  limits,  and  is  capable  of  any 
extreme. 

"Know  this  also,"  says  Carlyle,  in  closing  his 
French  Revolution, 

that  out  of  a  world  of  unwise  nothing  but  an  unwisdom 
can  be  made.  Arrange  it,  constitution-build  it,  sift 
it  through  ballot-boxes  as  thou  wilt,  it  is  and  remains 


52  The  Changing  Order 

an  unwisdom — the  new  prey  of  new  quacks  and  un- 
clean things,  the  latter  end  of  it  slightly  better  than 
the  beginning.  Who  can  bring  a  wise  thing  out  of 
men  unwise?    Not  one! 

It  has  been  the  boast  of  America  that  our  system 
was  carefully  framed  so  as  to  protect  against 
unwisdom,  by  a  system  of  checks  and  balances  so 
devised  as  to  secure  equal  rights  to  all,  and  to 
prevent  injustice  to  any. 

Before  we  wipe  away  the  institutions  so  care- 
fully planned  by  our  forefathers,  to  write  over 
their  ruins  the  new  social  contract,  and  the  revised 
and  latest  edition  of  "The  Rights  of  Man,"  shall  we 
not  pause  and  consider  whether  we  would  not 
throw  away  a  priceless  heritage,  and  like  Esau, 
barter  away  a  precious  birthright  of  freedom  for 
a  mess  of  delusive  pottage? 


BUSINESS  AND  THE  LAW1 

FROM  time  immemorial,  merchants  and  traders 
have  recognized  the  necessity  of  laws  to 
regulate  the  conduct  of  business.  Human  nature, 
always  more  or  less  the  same,  makes  it  necessary, 
to  prevent  perpetual  strife,violence,  and  bloodshed, 
that  the  rights  of  those  engaged  in  business  with 
each  other,  and  of  the  public  in  dealing  with  them, 
should  be  denned  and  recognized,  and  some 
method — the  simpler  the  better — established  for 
compelling  the  observance  of  those  rights,  by 
awarding  redress  to  any  one  who  is  injured  by  an 
invasion  of  them,  and  by  protecting  society  at  large 
from  the  consequences  of  such  invasion,  by  ade- 
quate punishments  to  prevent  repetitions  of  the 
offense. 

From  an  early  day,  customs  grew  up  among 
merchants  which  became  settled  and  uniform,  and 
were  recognized  as  binding  upon  them,  and  as 
embodying  the  best  methods  of  securing  fair  play 
among  them  and  protection  to  the  public.    As 

1  Address  before  the  Commercial  Club,  St.  Louis,  Mo.,  Feb. 
16,  1912. 

53 


54  The  Changing  Order 

early  as  the  fourteenth  century,  in  England,  in  the 
towns  where  foreign  commerce  was  carried  on — 
known  as  "staples"  or  "staple  markets" — there 
were  established  special  tribunals  for  the  ready 
enforcement  of  these  laws  of  trade.  Those  early 
courts — known  as  "Courts  Pie  Poudrous"  or 
"Pi-Powders" — set  an  example  which  it  would  be 
well  for  more  modern  tribunals  to  imitate — of 
sitting  during  fair  time  from  hour  to  hour,  both 
morning  and  afternoon,  hearing  and  disposing 
of  cases  in  a  summary  and  informal  way,  so  that 
disputes  arising  with  regard  to  contracts,  charter 
parties,  bills  of  lading,  or  other  commercial  matters, 
might  be  disposed  of,  in  the  language  of  the  old 
books  "between  tide  and  tide."  The  very  name 
of  these  courts  carries  the  suggestion  of  a  sim- 
plicity and  expedition  of  legal  procedure  as  far 
remote  from  our  modern  ways  as  the  time  of 
Edward  III  is  from  this  age.  We  can  imagine 
strange -looking  bearded  men,  speaking  all  manner 
of  foreign  tongues,  and  clad  in  sea  boots  and  fur- 
lined  robes,  with  the  dust  of  the  market  place  on 
their  feet,  and  the  salt  of  the  sea  in  their  hair  and 
beards,  making  their  complaints  or  their  defenses 
before  the  judges  of  the  staple,  producing  their 
witnesses,  and  receiving  speedy  judgment,  accord- 
ing to  their  own  usages,  at  the  hands  of  judges  in 
whose  fairness  and  wisdom  they  had  confidence, 
and  so  going  their  ways  recompensed,  or  cast  in 
damages,  as  the  justice  of  the  case  might  require, 
ere    the    sun    went    down.     These    courts    were 


Business  and  the  Law  55 

established,  as  a  statute  of  Edward  III  declared, 
to  give  courage  to  merchant  traders  to  come  with 
their  wares  and  merchandise  into  the  realm.  And 
the  knowledge  of  the  fact  that  foreign  merchants 
might  come  and  trade  according  to  the  best  usages 
of  the  business,  and  be  protected  by  the  summary 
administration  of  justice,  gave  an  impetus  to  the 
commerce  of  Great  Britain  which  carried  her  into 
the  first  rank  among  the  nations  of  the  world. 
The  staple  system  was  established  not  only  for 
the  purpose  of  facilitating  the  collection  of  the 
royal  customs,  but  to  insure  the  quality  of  exported 
goods. 

Commercial  morality  [says  a  writer  on  the  history 
of  this  system]  was  none  too  high  in  those  days,  and 
the  average  trader  fully  appreciated  the  maxim  caveat 
emptor.  He  had  not  the  ingenuity  of  his  nineteenth 
century  successor,  but  such  tricks  as  he  knew  for  the 
undoing  of  the  consumer  he,  too,  practiced  with 
energy  and  perseverance. ' 

The  rules  and  usages  of  the  merchants  ripened 
into  a  code  which  later  on  was  recognized  as  the 
Law  Merchant,  and  came  to  be  administered  in  the 
royal  courts  of  law,  and  has  come  down  to  us 
as  part  of  our  common  law,  much  of  it  now  being 
embodied  in  statutes  of  the  different  States. 

During  the  years  while  the  foreign  trade  and 
commerce  of  Great  Britain  was  receiving  its  great 
impetus  through  the  Staples,  the  makers  of  various 

1  Select  Essays  in  Anglo-American  Legal  History,  vol.  iii.,  p.  22. 


56  The  Changing  Order 

articles  of  commerce  in  the  towns  began  to  organ- 
ize themselves  into  associations  or  guilds,  which 
regulated  the  processes  of  manufacture,  and  the 
prices,  materials,  tools,  working  hours,  wages, 
number  of  apprentices  and  the  nature  of  their 
duties.  They  punished  dishonest  workmanship, 
the  use  of  bad  material,  short  weights  and  measures. 
In  a  word,  the  traders  of  every  town  united  in  the 
protection  and  pursuit  of  their  common  trade 
interests.  By  and  by,  these  guilds  were  recognized 
by  law,  charters  were  granted  to  them  by  Parlia- 
ment, and  they  controlled  in  each  city  the  conduct 
of  every  particular  trade  or  business.  In  course 
of  time,  as  towns  grew,  some  masters  prospered 
more  than  others,  the  wealthier  members  grew 
into  a  guild  aristocracy  and  endeavored  to  monopo- 
lize the  guild  privileges,  and  sought  to  keep  the 
inferior  class  from  sharing  in  them.  As  a  result, 
the  excluded  workmen  formed  new  associations — 
craft  guilds  of  their  own — and  being  more  numerous 
than  the  members  of  the  merchant  guilds,  became 
more  powerful,  and  gradually  superseded  those 
older  organizations  whose  selfishness  had  brought 
about  their  own  extinction.  In  other  words,  the 
successful  associations  of  merchants  of  the  four- 
teenth century  did  precisely  what  similar  organiza- 
tions have  done  in  the  nineteenth  and  twentieth 
centuries.  Insiders  became  selfish,  and  excluded 
from  membership  all  but  the  favored  few,  so  that 
by  keeping  down  their  numbers  they  might  keep 
up  their  profits;  they  sought  to  absorb  to  them- 


Business  and  the  Law  57 

selves  the  entire  control  of  lines  of  business;  they 
excluded  all  competition.  In  the  end,  the  number 
of  outsiders  became  so  large  that  they  formed  new 
guilds — or  unions — imitated  the  selfish  perform- 
ances of  their  predecessors,  and  the  outsider  who 
was  not  a  member  of  either  a  merchant  guild  or  a 
craftsmen's  guild  was  ground  between  both.  So 
the  law  of  the  realm  had  to  be  invoked — in  a  meas- 
ure, the  old  common  or  customary  law,  and 
sometimes  direct  legislative  action — to  protect  the 
individual  against  the  tyrannous  power  of  these 
organizations.  The  problem  arose  then,  as  it  has 
in  larger  form  in  our  own  times,  of  how  to  adjust 
the  rights  of  all  the  people  with  the  legitimate  rights 
of  a  small  number  of  the  people  associated  together 
for  the  conduct  of  a  particular  business. 

Centuries  rolled  by;  America  was  discovered, 
colonized,  grew  up  mid  stress  and  storm;  fought 
for  independence,  won  it  upon  the  basis  of  a  creed 
that  all  men  were  endowed  with  certain  inalienable 
rights,  among  which  are  life,  liberty,  and  the  pur- 
suit of  happiness,  and  that  to  secure  these  rights 
governments  are  instituted  among  men,  deriving 
their  just  powers  from  the  consent  of  the  governed. 
Such  a  government  our  fathers  established  by 
means  of  a  written  constitution,  adopted  for  the 
declared  purpose  of  establishing  justice,  insuring 
domestic  prosperity,  and  securing  the  blessings 
of  liberty  to  the  people  of  the  United  States  and 
their  posterity.  Lecky,  in  his  Democracy  and 
Civil  Liberty y  says  that  the  ends  which  the  great 


58  The  Changing  Order 

American  statesmen  set  before  them  and  which 
they  in  large  measure  attained  in  framing  the 
Constitution,  were: 

to  divide  and  restrict  power;  to  secure  property; 
to  check  the  appetite  for  organic  change;  to  guard 
individual  liberty  against  the  tyranny  of  the  multitude 
as  well  as  the  tyranny  of  an  individual  as  a  class;  to 
infuse  into  American  political  life  a  spirit  of  continued 
and  of  sober  and  moderate  freedom. 

During  the  first  fifty  years  of  national  existence 
under  the  Constitution,  it  may  be  said  that  these 
ends  were  almost  absolutely  attained.  Lord  Acton, 
writing  of  this  period,  says  that  the  causes  of  Old 
World  trouble — popular  ignorance,  pauperism, 
the  glaring  contrast  between  rich  and  poor,  reli- 
gious strife,  public  debts,  standing  armies,  and 
war — were  almost  unknown.  "No  other  age  or 
country,  had  solved  so  successfully  the  problems 
that  attend  the  growth  of  free  societies,"  and,  he 
adds,  "time  was  to  bring  no  further  progress."1 
I  pray  that  the  day  may  be  long  distant  when  it 
can  truly  be  said  of  American  institutions  that 
time  can  bring  them  no  further  progress.  Pro- 
gress is  only  attained  by  meeting  and  overcom- 
ing problems.  The  more  complex  and  apparently 
insoluble  the  problems,  the  greater  the  progress  to 
be  realized  by  solving  them.  Growth  of  nations, 
as  of  individuals,  is  the  result  of  struggle.  The 
same   causes  which  operated   to  cause  the   Old 

1  Acton,  Essays  on  Liberty,  p.  56. 


Business  and  the  Law  59 

World  trouble  referred  to  by  Lord  Acton,  exist 
in  a  far  less  degree  in  our  country  than  they  did 
there.  We  have  no  religious  strife;  our  public 
debts  are  not  onerous;  we  have  had  but  one  great 
war,  and  that  half  a  century  ago ;  it  was  not  a  war 
of  aggression,  but  a  war  which  rid  us  of  the  great 
moral  evil  of  slavery,  and  established  a  basis  of 
united  and  reinforced  nationalism  strong  enough 
to  cope  with  the  great  problems  the  future  holds 
for  us.  We  have  no  popular  ignorance,  but  a 
widespread  popular  intelligence.  True,  we  have 
had,  and  we  still  have,  some  glaring  contrasts 
between  rich  and  poor.  Progress  and  poverty 
have  gone  hand  in  hand,  but  to  nothing  like  the 
same  extent  as  in  the  greatest  civilizations  of 
ancient  times. 

The  century  just  passed  has  been  one  of  un- 
paralleled progress  in  the  application  of  science 
to  industry  and  the  affairs  of  daily  life.  The 
almost  boundless  natural  resources  of  this  great 
American  continent  have  been  developed  and 
applied  in  the  light  of  a  rapidly  increasing  knowl- 
edge of  the  laws  of  nature,  and  an  equally  increasing 
control  over  natural  forces.  A  century  which  saw 
the  application  first  of  steam  and  then  of  electricity 
to  transportation,  the  invention  and  development 
of  the  electric  telegraph,  wireless  communication, 
the  invention  of  the  cotton-gin  and  the  spinning 
jenny,  the  automobile  and  the  aeroplane,  and  a 
thousand  other  devices,  cannot  be  judged  by  the 
standards  which  should  be  applied  to  any  other 


60  The  Changing  Order 

age  in  recorded  history.  Population  increased  as 
by  magic;  the  most  energetic  and  most  adventur- 
ous of  the  peoples  of  the  Old  World  poured  into  our 
country.  Our  natural  resources  were  exploited, 
developed,  controlled,  and  marketed  with  bewil- 
dering success.  Wealth  accumulated  as  by  the 
wave  of  a  magician's  wand;  little  heed  was  given 
to  the  laws  of  business  or  of  business  association, 
because  the  field  was  open  to  all,  and  energy  and 
enterprise  were  impatient  of  restriction  or  control. 
A  community  into  whose  lap  was  poured  increas- 
ing and  apparently  inexhaustible  wealth,  took 
little  interest  in  suggestions  to  interfere  with  the 
activities  of  men  who  were  achieving  such  con- 
spicuous success.  But  man  is  an  insatiable  crea- 
ture; though  he  heap  up  untold  riches,  yet  his 
appetite  grows  by  what  it  feeds  upon,  and  he  is 
never  content  to  cry  "Enough!"  The  more  he 
has,  the  more  he  covets,  and  the  less  willing  he 
becomes  to  allow  others  any  share  in  the  common 
wealth  from  which  his  power  or  his  cunning  can 
exclude  them.  The  garnered  fortunes  of  American 
merchants  and  of  American  specu  ators  assumed 
such  magnitude,  the  influence  exerted  by  them  in 
public  affairs  became  so  obnoxious  to  the  welfare 
of  the  community  and  to  the  safety  and  continu- 
ance of  free  institutions,  that  a  gathering  wave  of 
protest  began  to  rise  and  to  sweep  with  increasing 
force  across  the  land.  It  found  expression  in 
legislation  of  a  character  which  would  have 
seemed  impossible  to  the  statesmen  of  our  older 


Business  and  the  Law  61 

days.  Students  of  Jefferson,  who  believed  that 
that  people  is  best  governed  that  is  least  governed, 
were  appalled  at  the  growing  volume  of  legislation 
which  they  claimed  interfered  with  the  exercise 
by  men  of  the  ordinary  avocations  of  life.  Indig- 
nant protest  cried  out  from  the  ranks  of  those 
whose  onward  career  towards  increasing  wealth 
and  power  was  sought  to  be  thus  checked.  It  was 
the  old  problem  that  had  arisen  in  Europe  over 
five  hundred  years  previously — the  problem  of 
protecting  the  rights  and  opportunities  of  all  the 
people  against  the  selfish  tyranny  of  the  organiza- 
tions or  groups  that  had  acquired  wealth  and  power 
so  great  as  to  lose  sight  of  the  rights  of  all  those 
outside  of  their  own  ranks.  The  evil  was  to  be 
met  by  the  application,  on  behalf  of  all  the  people, 
of  those  same  rules  of  fair  trade  which  had  grown 
up  among  the  sturdy  traders  of  the  fourteenth  and 
fifteenth  centuries. 

The  first  subject  to  be  wrested  from  the  unfair 
control  of  special  groups  or  interests  was  the 
greatest  agency  of  modern  commerce — transpor- 
tation by  railroad.  During  the  years  of  develop- 
ment of  a  new  country,  railroad  charters  had  been 
freely  granted  by  State  governments  to  any  who 
chose  to  take  them,  and  the  right  of  eminent 
domain  was  freely  conferred  upon  all  who  were  bold 
enough  to  undertake  the  construction  of  lines  of 
railroad.  The  shrewdest  merchants  were  swift 
to  perceive  the  advantage  of  controlling  trans- 
portation, and  the  greatest  impetus  to  monopo- 


62  The  Changing  Order 

listic  control  of  industry  was  afforded  by  securing 
special  privileges  in  rates  and  methods  of  trans- 
portation. 

One  looks  back  on  the  history  of  American  rail- 
road construction  with  mingled  feelings  of  pride 
and  shame!  Pride  in  the  enterprise  and  courage 
with  which  men  undertook  to  build  lines  of  railroad 
in  the  face  of  every  conceivable  natural  obstacle, 
and  invoked  the  highest  engineering  skill  to 
overcome  difficulties  which  in  any  other  age  would 
have  daunted  and  defeated  the  most  enterprising; 
shame  at  the  conscienceless  way  in  which  the 
public  was  defrauded  by  the  issue  of  securities 
without  value,  by  the  methods  with  which  trustees 
of  great  properties  juggled  with  them  in  their  own 
interests,  and  enriched  themselves  at  the  expense 
of  those  they  should  have  protected.  One  looks 
back  on  the  history  of  the  growth  of  American 
business  during  the  last  forty  years  with  the  same 
mingled  feelings — admiration  and  pride  at  the 
splendid  development  of  methods  of  production 
and  distribution  which  made  American  manu- 
facturers and  American  merchants  the  foremost 
in  the  world;  which  invented  the  department 
store  and  the  mail-order  house ;  which  devised  the 
most  perfect  system  of  manufacturing  and  deliver- 
ing goods  to  the  purchaser  ever  known  in  history — 
but  shame  at  the  birth  and  growth  of  a  system  of 
underhand,  concealed,  and  unfair  dealing,  whereby 
competition  was  stifled,  industries  monopolized, 
equality  of  opportunity  denied,  and  charters  of 


Business  and  the  Law  63 

incorporation,  granted  for  the  benefit  of  all  the 
people,  made  instruments  for  the  enrichment  of 
the  few  at  the  expense  of  all  others. 

The  first  attempt  to  cope  by  national  legislation 
with  the  evils  which  had  resulted  from  the  enor- 
mous growth  of  wealth  in  our  country,  therefore, 
naturally  was  directed  at  the  management  of  the 
railways;  for  that  subject  concerned  almost  every 
inhabitant  of  the  country.  Probably  no  business 
man  to-day  could  be  found  who  would  not  applaud 
the  legislation  which,  beginning  with  the  Inter- 
state Commerce  Act  of  1887,  has  been  added  to, 
amended,  expanded,  and  finally  has  found  its  last 
expression  in  the  act  of  191  o.  By  these  statutes, 
the  principle  has  been  firmly  established  that  rates 
shall  be  reasonable;  that  there  shall  be  no  unjust 
discrimination  between  those  who  use  the  railroads; 
and  that  any  violation  of  the  laws  declaring  these 
principles  shall  be  punished  with  fine  and  im- 
prisonment. The  railroad  companies  consistently 
and  persistently  have  fought  every  effort  to  make 
these  laws  adequate  to  the  protection  of  the  in- 
individual  merchant  or  shipper,  and  to  secure  him 
that  fairness  and  equality  of  treatment  to  which 
every  citizen  is  entitled;  but  step  by  step  the 
battle  has  been  fought  and  the  victory  won  for  the 
whole  people. 

Next,  the  attention  of  the  national  legislature 
was  directed  to  the  great  artificial  aggregations  of 
manufacturers  and  dealers  which  had  grown  up 
under  the  lax  system  of  legislation  existing  in  every 


64  The  Changing  Order 

State  in  the  Union,  whereby  charters  were  handed 
out,  without  inquiry,  conferring  power  to  engage 
in  any  form  of  industry;  and  legal  immortality, 
and  immunity  from  personal  liability  upon  any 
group  of  men  who  could  raise  enough  money  to 
pay  the  nominal  organization  fees.  Like  the 
medieval  guilds,  many  of  these  associations  had 
grown  rich  and  great,  and  in  the  plenitude  of  their 
power,  had  ruthlessly  invaded  the  rights  and 
trampled  on  the  liberties  of  every  one  not  within 
their  organization.  Those  who  were  in  control 
of  their  machinery  had  in  many  instances  utilized 
their  position  and  the  advantages  of  the  knowledge 
and  power  which  they  possessed,  to  enrich  them- 
selves even  at  the  expense  of  their  own  constituents ; 
and  these  combinations  had  become  so  strong  that 
nothing  but  the  power  of  the  nation  was  adequate 
to  check  them  and  drive  them  back  to  their  proper 
bounds.  A  growing  recognition  of  these  evil  condi- 
tions led  to  the  enactment  of  the  Sherman  Law  of 
1 890.  I  do  not  propose  here  to  review  the  history  of 
that  law — of  how  it  was  first  treated  with  contempt- 
uous indifference;  how  the  Supreme  Court  of  the 
United  States  at  first  failed  to  grasp  its  proper  appli- 
cation ;  how  a  better  know!  edge  of  its  scope  and  mean- 
ing grew;  how  decision  after  decision  finally  made 
manifest  to  the  people  their  power,  by  means  of  that 
law,  to  check  the  growing  evil  of  unfair  methods  of 
controlling  the  trade  and  commerce  of  the  nation, 
and  finally  through  it  to  break  up  the  great  monop- 
olies of  trade  and  prevent  new  ones  from  forming. 


Business  and  the  Law  65 

The  law  at  first  was  almost  murdered  in  the 
house  of  its  friends,  because  there  was  given  to  it 
by  some  courts  and  some  judges  a  construction 
which,  if  finally  established  by  the  Supreme  Court, 
would  have  reduced  it  to  absurd  consequences, 
and  made  of  an  act  established  for  the  purpose  of 
preventing  unlawful  restraints  upon  the  commerce 
of  the  nation,  a  means  of  accomplishing  the  de- 
struction of  that  commerce. 

Surely,  no  thoughtful  man,  reading  the  history 
of  his  country  during  the  past  sixty  years,  can  fail 
to  feel  thankful  at  the  demonstration  of  the  power 
of  his  government  peaceably  to  cope  with  the  great 
forces  of  monopoly  and  unfair  trade,  and  to  force 
back  within  their  bounds  the  scope  of  successful 
enterprise;  so  that,  however  rich,  however  power- 
ful in  the  progress  of  trade  and  commerce  they 
may  become,  men  shall  be  compelled  to  recognize 
the  rights  of  others,  and  be  prevented  from, 
by  unfair  competition,  achieving  the  ruin  of  all 
competitors. 

This  is  a  big  country;  large  capital  is  required 
to  conduct  business  in  a  manner  adequate  to  the 
needs  of  an  hundred  millions  of  people.  We  cannot 
go  back  to  the  days  of  small  trading,  and  continue  to 
supply  the  wants  of  our  people  at  prices  which 
would  be  adequate  returns  on  small  investment. 
The  wages  reasonably  demanded  by  American 
standards  of  living  can  only  be  paid  as  incident  to 
the  conduct  of  business  on  a  large  scale.  But  the 
essential  principle,  upon  the  enforcement  of  which 


66  The  Changing  Order 

alone  can  the  welfare  of  the  people  permit  the 
continued  existence  of  artificial  bodies  with  large 
capital,  is  the  recognition  of  the  power  of  the 
government  as  greater  than  that  of  any  corporation 
or  group  of  men,  and  the  constant  exercise  of  that 
power  to  preserve  the  rights  of  the  humblest  citizen 
as  well  as  the  richest. 

Probably  negative,  restrictive  legislation  has 
gone  as  far  as  is  necessary.  The  great  principles 
that  the  highways  of  commerce  shall  be  open  to  all 
on  equal  terms  to  those  under  like  conditions  and 
similar  circumstances,  and  that  men  may  not 
band  themselves  together  by  unfair  methods  to 
destroy  competitors,  are  now  fully  recognized  by 
law,  and  adequate  means  are  provided  to  prevent 
violations  of  that  law.  Most  men  are  learning 
the  difference  between  a  combination  to  get  busi- 
ness, and  a  combination  to  get  a  competitor. 

What  is  left  as  yet  untouched,  is  the  provision 
by  national  legislation  of  some  adequate  law  of 
association,  under  which  there  may  be  retained 
the  great  advantages  of  cooperative  effort  in  the 
conduct  of  business — which  in  our  day  and  genera- 
tion must  be  great  in  volume  successfully  to  meet 
the  needs  of  the  people — while  at  the  same  time 
protecting  the  people  from  the  consequences  of 
unrestrained  association,  which  in  the  past  has 
resulted  in  unfair  competition  and  grossly  unequal 
fortunes.  Nothing  but  continued  confusion  can 
result  from  leaving  the  creation  and  regulation  of 
these  associations  to  the  varying  caprices  of  forty- 


Business  and  the  Law  67 

eight  or  fifty  States.  Until  the  national  govern- 
ment courageously  faces  the  question  and  accepts 
the  responsibility  which  the  assertion  of  power 
involves,  the  proper  equation  between  business 
and  the  law  cannot  be  adequately  settled.  In  our 
corporate  laws  we  have  shown  little  of  the  sagacity 
which  characterized  our  forefathers  in  framing  our 
constitutions. 

In  the  development  of  a  new  continent  there  was, 
of  course,  a  tremendous  advantage  in  laws  which 
enabled  a  number  of  coadventurers  to  contribute 
toward  a  common  fund  to  be  devoted  to  a  particular 
enterprise  without  liability  beyond  the  amount  so 
contributed.  But  when  this  contribution  became 
a  mere  sham  and  subterfuge;  when  the  actual 
capital  of  a  corporation  was  only  the  money 
borrowed  on  the  faith  of  a  fictitious  capital,  and 
representations  as  to  its  business,  in  which  imagi- 
nation and  hope  played  a  much  greater  r61e  than 
facts,  corporate  organization  became  in  a  large 
measure  an  instrument  for  fraud.  When  partner- 
ships between  corporations  were  legalized  by 
State  authority,  and  one  creature  of  legislation 
extended  its  control  over  an  indefinite  number  of 
others  through  the  acquisition  of  shares  of  their 
stock,  there  was  built  up  an  irresponsible  engine 
for  monopolizing  business  such  as  the  world  had 
never  witnessed.  It  is  probably  safe  to  say  that 
a  very  small  percentage  of  even  the  successful 
great  combinations  of  business  were  created  for 
legitimate  business  purposes,  or  in  the  recognition 


68  The  Changing  Order 

of  a  legitimate  demand  for  business  extension. 
They  were  often  created  to  enable  those  who  con- 
trolled their  machinery,  and  the  financiers  with 
whom  they  dealt,  to  issue  and  sell  to  the  public 
vast  amounts  of  stocks  and  bonds  at  prices  far 
beyond  their  actual  value,  and  thus  greatly  to 
enrich  themselves  at  the  expense  of  the  country. 
They  piled  up  fortunes  without  precedent.  Some- 
times the  stockholders  profited,  sometimes  they 
did  not.  Seldom,  if  ever,  did  they  profit  in  the 
same  degree  as  the  group  who  were  in  control. 
In  the  rush  and  progress  of  industry,  few  thought 
of,  and  still  fewer  acted  in  accordance  with,  the 
principle  that  makes  an  agent  or  trustee  liable  to 
account  to  his  principal  for  all  the  profits  realized 
in  carrying  out  the  principal's  business.  These 
things  are  so  well  known  that  it  is  but  repeating 
well-ascertained  facts  to  refer  to  them.  They  con- 
stitute one  of  the  scandals  of  an  age  which  has  so 
much  in  other  ways  to  be  proud  of.  Surely,  the 
generation  that  has  seen  these  things,  that  has 
been  made  keenly  alive  to  their  evil  influence  in 
the  State  and  to  their  false  economic  results, 
should  not  pass  away  without  enacting  legislation 
and  securing  methods  of  so  enforcing  it  as  to  for- 
ever prevent  the  recurrence  in  the  future  of  any 
such  conditions. 

How  shall  this  be  done?  How  can  it  be  done, 
save  through  Federal  legislation  which  shall  deal 
with  the  conduct  of  business  among  the  States 
and  with  foreign  nations  by  associations  of  men 


Business  and  the  Law  69 

in  corporate  form;  which  shall  so  regulate  the 
methods  of  organization  of  such  associations  as  to 
prevent  those  who  deal  with  them  from  deception 
concerning  their  capital  or  business;  which  shall, 
by  appropriate  provisions,  make  it  certain  that 
every  person  who  invests  either  by  way  of  stock- 
purchase  or  loan  shall  have  at  all  times  the  means 
of  securing  adequate  information  concerning  the 
property,  business,  and  earnings  and  expenses  of 
the  associations ;  and  that  shall  prevent  them  from 
being  used  as  engines  of  unfair  competition  and 
destruction  of  others  engaged  in  fair  competition 
with  them?  No  limit  can  or  should  be  set  to  the 
capacity  of  such  an  association  for  legitimate, 
normal  growth;  but  it  should  be  impossible  for  it 
to  inflate  itself  by  mythical  values  based  upon  no- 
thing but  expectation,  hope,  or  misrepresentation. 
No  individual  carrying  on  business  as  such,  and  no 
mere  partnership,  has  ever  yet  succeeded  in 
absorbing  so  large  a  share  of  the  trade  or  commerce 
of  the  country  as  to  accomplish,  or  threaten  to 
accomplish,  monopoly.  Individuals  united  by 
secret  agreements  restraining  their  own  action, 
and  plotting  the  destruction  of  competitors  by 
secret,  unfair  methods,  have  threatened  the 
stability  of  trade,  abnormally  increased  the  price 
of  products,  and  disturbed  the  normal  currents  of 
business;  but  the  great  monopolies  which  have 
arisen  have  always  operated  under  corporate  form, 
and  only  by  means  of  controlling  corporate  organi- 
zation can  the  national   government  effectively 


70  The  Changing  Order 

prevent  the  recurrence  of  evil,  and  introduce  that 
certainty  into  the  law  of  the  conduct  of  business 
by  association  which  is  so  requisite  to  wholesome 
national  trade  conditions. 

No  right-minded  man  begrudges  to  superior 
intelligence  the  fruits  of  honest  ingenuity  and 
industry;  but  no  patriot  would  be  willing  to  see 
Americans  become  mere  servants  of  great  cor- 
porate organizations.  Only  free  men — not  indus- 
trial slaves — can  maintain  free  institutions.  The 
problem  before  the  business  men  of  to-day  is, 
in  Lecky's  language,  to  infuse  into  and  retain  in 
American  political  life  a  spirit  of  continued  sober 
and  moderate  freedom. 


VI 

ENGINEERING  AND  CULTURE1 

THIRTY-FOUR  years  ago  I  was  an  undergrad- 
uate of  Lehigh,  a  student  in  the  School  of 
Civil  Engineering;  destined,  as  I  then  thought,  to 
follow  that  profession  as  my  life  work.  Fortu- 
nately, I  found  a  wise  counselor  in  Dr.  Henry 
Coppee,  at  that  time  President  of  the  University, 
a  student  and  teacher  of  literature,  quick  to 
recognize  in  a  young  student  a  taste  for  letters, 
and  who,  charitably  excusing  my  lack  of  aptitude 
for  scientific  pursuits  by  attributing  to  me  capacity 
in  other  directions,  advised  me  to  give  up  the  study 
of  calculus  for  that  of  Blackstone.  For  this  counsel 
I  have  been  always  grateful.  I  refer  to  it,  not  as 
in  itself  a  matter  of  interest  to  others  than  myself, 
but  as  evidence  of  the  far  more  important  fact 
that,  even  in  those  early  days,  the  student  at  Lehigh 
was  given  by  the  faculty  that  suggestion  and  direc- 
tion which  was  suited  to  his  particular  needs. 
This  was  hardly  to  have  been  expected  at  that 
time,  for  the  absorbing  interests  of  the  institution 

1  Address  on  receiving  the  honorary  degree  of  LL.D.,  at  Lehigh 
University,  Bethlehem,  Pa.,  June  8,  1909. 

71 


72  The  Changing  Order 

were  then  technical  and  practical,  and  as  a  rule  the 
students  were  endeavoring  to  acquire  a  sufficient 
training  in  scientific  and  engineering  lines  to 
enable  them  to  make  a  living ;  and  the  faculty  was 
addressing  itself  to  the  accomplishment  of  that 
effort. 

The  country  was  slowly  recovering  from  the 
panic  of  1873;  ^e  resumption  of  specie  payments 
and  the  era  of  prosperity  was  yet  several  years  off. 
But  the  great  need  of  railway  and  industrial  de- 
velopment was  even  then  appreciated,  and  it  was 
felt  that  soon  there  would  be  a  great  demand 
for  well  trained  engineers. 

The  thoughts  of  many  eager  young  men  were 
therefore  centered  in  preparation  for  the  different 
branches  of  engineering,  in  the  belief  that  those 
vocations  offered  the  most  promising  pathways 
to  success  and  prosperity.  Pennsylvania,  particu- 
larly the  Lehigh  Valley,  was  recognized  as  a  great 
field  for  a  development  in  which  engineering  and 
chemistry  would  necessarily  play  a  large  part. 

Foreseeing  this,  and  the  advantage  to  the  youth 
of  the  Lehigh  Valley  of  proper  preparation  for  its 
demands,  Judge  Packer  had  in  1865  endowed  and 
founded  this  institution,  with  the  object,  as  set 
forth  in  the  Register  of  the  University,  "to  afford 
the  young  men  of  the  Lehigh  Valley  a  complete 
education,  technical,  literary  and  scientific,  for 
those  professions  represented  in  the  development 
of  the  peculiar  resources  of  the  surrounding 
region."     Analytical   chemists   and   mining   and 


Engineering  and  Culture  73 

civil  engineers  were  at  first,  therefore,  as  was 
natural,  almost  the  sole  products  of  the  institution, 
and  during  the  first  ten  years  of  its  existence,  out 
of  eighty-one  degrees  conferred  by  Lehigh,  only 
six  were  of  Bachelor  of  Arts. 

The  early  graduates  of  the  University  easily 
obtained  profitable  employment,  and  their  suc- 
cesses inspired  many  others  to  come  here  for  that 
training,  the  commercial  value  of  which  met  with 
such  ready  recognition. 

Your  honored  President,  Henry  S.  Drinker,  an 
alumnus  of  only  three  or  four  years'  standing  when 
I  entered  the  University,  had  already  won  distinc- 
tion by  his  work  in  the  building  of  the  Amboy 
tunnel,  and  his  accomplishments  were  taken  as 
an  example  of  the  opportunities  which  were  open 
to  every  graduate  of  the  Engineering  School,  al- 
though few  felt  they  could  acquit  themselves  with 
as  much  distinction  as  he  had  done. 

It  was  natural  at  that  time  for  Americans,  with 
a  sense  of  the  great  natural  resources  of  their 
country,  to  turn  to  the  study  and  application  of 
practical  science,  in  order  that  they  might  aid  in 
the  development  of  those  resources,  and  share  in 
the  material  results  thereby  to  be  realized. 

It  was  natural,  too,  that  on  the  threshold  of  a 
great  industrial  and  material  development,  young 
men  should  address  themselves  to  technical  studies 
with  the  view  to  fitting  themselves  in  the  shortest 
possible  time  for  practical  work,  and  that  they 
should  be  impatient  of  what  seemed  to  them  a 


74  The  Changing  Order 

waste  of  time  in  such  preliminary  academic  prepa- 
ration as  was  required  for  the  professions  of  law 
and  medicine.  This  spirit  was  not  confined  to 
Lehigh.  It  was  characteristic  of  other  technical 
schools ;  perhaps  of  all  of  them.  But  the  engineer- 
ing profession,  it  seems  to  me,  has  suffered  in 
consequence,  and  while  American  engineers  have 
led  the  world  in  practical  achievement,  I  think 
I  am  correct  in  saying  they  never  have  taken 
quite  the  rank  in  American  social  and  political 
life  commensurate  with  their  accomplishments  in 
their  own  profession.  I  ascribe  this  to  the 
fact  that  their  training  has  been  too  purely  tech- 
nical ;  they  have  specialized  too  early  in  life,  and 
without  that  broad  and  catholic  foundation  upon 
which  special  training  should  be  based. 

The  gentleman  who  delivered  the  alumni  ad- 
dress at  your  last  commencement  said: 

Our  older  collegians  are  almost  universally  graduates 
of  the  literary  schools.  When  we  go  forth  into  the 
world  at  large  and  come  into  contact  with  them,  we 
find  that  they  are  unwilling  to  concede  the  full  value 
of  the  technical  education. 

I  do  not  agree  with  that  statement.  All  edu- 
cated men  concede  the  full  value  of  the  technical 
education:  its  results  fully  demonstrate  it.  But 
the  defects  in  a  merely  technical  education  are  also 
easily  perceived.  "  It  is  true, "  as  was  said  in  that 
address,  "that  the  requirements  of  civilization  have 
gone  far  beyond  that  which  is  purely  culture;" 


Engineering  and  Culture  75 

that  is  to  say,  an  age  conspicuous  for  its  ascertain- 
ment and  practical  application  of  the  forces  of 
nature  has,  of  course,  gone  beyond  the  period  of 
merely  conning  the  texts  of  sacred  books,  after 
the  manner  of  the  Chinese.  But  the  requirements 
of  a  civilization  that  is  not  purely  materialistic 
have  not  dispensed  with  art  and  literature,  nor 
ignored  the  tremendous  importance  of  the  imagina- 
tion— the  value  of  poetry  and  song,  in  inspiring 
that  impulse  which  achieves  the  greatest  practical 
results, — nor  can  they  minimize  the  importance  of 
the  study  of  the  past  history  of  man,  for  contrast 
and  example,  for  warning  and  for  emulation. 

The  art  of  measuring  [says  Mommsen]  brings  the 
world  into  subjection  unto  man;  the  art  of  writing 
prevents  his  knowledge  from  perishing  along  with  him- 
self;  together,  they  make  man — what  nature  has  not 
made  him — all  powerful  and  eternal.  .  .  .  Measure- 
ment [he  adds]  necessarily  presupposes  the  develop- 
ment of  the  several  ideas  of  units  of  time,  of  space  and 
of  weight,  and  of  a  whole  consisting  of  equal  parts,  or 
in  other  words  of  number  and  of  a  numeral  system. 

This  development — this  adequate  development  of 
the  units  of  time,  space,  and  weight — is  suggestive 
of  that  development  of  the  capacity  of  the  mind  of 
man  which,  availing  of  the  knowledge  of  man's 
experience  in  the  past,  preserved  from  perishing 
by  the  art  of  writing,  is,  or  should  be,  the  aim  and 
object  of  the  education  of  all  men.  The  best 
superstructure  of  special  technical  knowledge  is 


76  The  Changing  Order 

built  on  the  broad  foundation  of  general  intellec- 
tual and  moral  culture. 

In  an  age  of  great  technical  and  industrial  devel- 
opment, the  tendency,  almost  the  irresistible 
tendency,  is  towards  pure  materialism — the  exalt- 
ing of  practical  accomplishment  in  the  production 
of  wealth  over  the  less  tangible  results  of  the  study 
of  history,  literature,  and  art;  and  so  there  is  on 
the  part  of  many  men  who  have  attained  success 
in  business  life,  or  in  the  practical  sciences,  a 
disposition  to  extol  such  accomplishments  beyond 
all  others,  and  to  undervalue,  or  not  at  all  to 
realize  the  value  of,  mental  culture  in  any  other 
than  purely  technical  lines. 

It  is  to  be  noted,  however,  that  the  greatest 
discoveries  in  science  followed  that  great  intel- 
lectual awakening  which  is  known  as  the  Renais- 
sance. The  revival  of  learning,  the  desire  for 
general  culture,  which  found  inspiration  in  the 
study  of  the  art,  the  literature,  and  the  history  of 
the  Greeks  and  Romans,  produced  as  its  first 
fruits  the  marvelous  architecture  of  Bramante, 
Michelangelo,  and  Brunelleschi :  the  Basilica  of 
St.  Peter's  in  Rome,  and  the  Duomo  of  Florence; 
the  paintings  of  Leonardo,  Raphael,  and  Titian; 
the  sculpture  of  Ghiberti,  Luca  della  Robbia, 
Donatello,  and  Michelangelo;  the  immortal  Di- 
vine Comedy  of  Dante,  and  the  tender  lyrics 
of  Petrarch.  Then  followed  the  philosophy  of 
Erasmus  and  Colet  and  More,  the  epic  poem  of 
Ariosto,  and  the  historical  work  of  Guicciardini. 


Engineering  and  Culture  77 

Upon  this  splendid  foundation  of  art  and  poetry 
and  letters  was  built  the  stately  structure  of 
modern  science. 

Copernicus  while  studying  mathematics  devoted 
his  spare  time  to  painting.  Galileo  was  an  earnest 
student  of  literature,  accomplished  as  a  Greek 
and  Latin  scholar,  a  musician,  and  a  painter,  when 
the  vibrations  of  the  great  swinging  lamp  at  Pisa 
first  directed  his  attention  to  a  problem  in  physics 
which  led  to  his  great  discoveries.  Newton  pur- 
sued his  studies  at  Trinity  College,  Cambridge, 
and  was  graduated  in  1665  with  the  degree  of 
Bachelor  of  Arts.  Galvani  and  Volta,  Priestley 
and  Lavoisier,  were  contemporaries  of  Rousseau 
and  the  Encyclopedists.  The  steam  engine  was 
invented  by  Watt,  the  locomotive  by  Stephenson, 
and  the  spinning  jenny  by  Arkwright,  at  a  time 
when  the  whole  civilized  world  was  in  a  ferment 
of  intellectual  agitation  concerning  the  rights  of 
man  and  the  theories  of  social  order,  and  when  the 
history  and  the  literature  of  the  ancient  world  were 
eagerly  studied  for  light  on  the  fundamental  prin- 
ciples of  civil  government  and  individual  liberty. 

Almost  without  exception,  the  great  men  whose 
names  have  been  written  large  in  the  history  of 
science  were  men  of  broad  culture,  often  almost 
as  proficient  in  literature  and  art  as  in  science. 

Leonardo  da  Vinci,  that  nearly  universal  genius, 
the  reviver  of  the  science  of  hydraulics,  the  inven- 
tor of  the  camera  obscura,  and  of  innumerable 
designs  for  engines  of  war,  tunnels,  and  canals  for 


78  The  Changing  Order 

traffic,  united,  as  is  well  known,  these  achievements 
with  the  highest  accomplishments  in  painting  and 
sculpture.  His  training  was  obtained  under  Ver- 
rocchio,  goldsmith,  sculptor,  painter,  and  teacher, 
and  the  universality  of  his  education  is  testified 
to  not  only  by  his  early  sketches  and  paintings, 
but  by  the  tales  of  his  daring  architectural  and 
engineering  projects.  Bramante  and  Brunelleschi 
are  known  almost  as  well  for  their  proficiency  in 
art  and  letters  as  because  of  St.  Peter's  Church 
and  the  Duomo  of  Florence.  The  versatile 
Franklin,  the  all- wise  Humboldt,  the  accomplished 
Bunsen,  and  the  cultured  Priestley,  are  illustrations 
of  the  fact  that  mere  technical  education  alone 
has  never  secured  the  first  rank  in  the  life  of  the 
community.  The  written  word  is  more  imperish- 
able than  marble  and  steel. 

"The  aspiring  youth  that  fired  the  Ephesian 
dome  outlives  in  fame  the  pious  fool  that  raised 
it." 

The  epic  tales  of  Homer,  the  Divine  Comedy 
of  Dante,  the  logic  of  Aristotle,  the  human  drama 
of  Shakespeare,  all  teach  the  lesson  of  human  life, 
in  the  knowledge  of  which  is  to  be  found  power  to 
comprehend  and  help  and  guide  and  lead  men, 
which  is  the  supremest  accomplishment  of  man. 

The  temple  of  Diana  at  Ephesus  has  crumbled 
away,  but  the  tragedies  of  ^Eschylus  and  the 
comedies  of  Euripides  remain.  The  Roman  Forum 
is  an  interesting  collection  of  ruins.  Only  frag- 
ments remain  to  indicate  to  us  the  skill  of  the 


Engineering  and  Culture  79 

forgotten  engineers  who  built  the  great  aque- 
ducts and  bridges  and  temples  of  imperial  Rome. 
But  the  Odes  and  Satires  of  Horace,  the  Letters  of 
Pliny,  and  the  Lives  of  Plutarch  make  the  great 
men  of  Rome  as  real  to  us  as  those  of  yesterday 
in  France  or  England.  From  them,  from  their 
experience,  their  ideas,  their  failures,  and  their 
accomplishments,  many  an  inventive  mind  has 
caught  inspiration  and  has  had  imagination 
stimulated  to  the  solution  of  great  problems  in 
art,  in  architecture,  and  in  science.  The  man 
who  goes  out  into  the  world  without  the  knowl- 
edge of  these  humanities  is  therefore  lacking  in  a 
mental  equipment  which  leaves  him  subject  to  a 
serious  handicap.  True,  he  may  make  it  up  after 
leaving  college,  but  it  is  difficult,  and  requires 
exceptional  character. 

Robert  Louis  Stevenson,  writing  of  his  grand- 
father Robert,  one  of  the  most  distinguished 
engineers  of  his  time,  describes  him  as  "a  man 
of  the  most  zealous  industry,  greedy  of  occupation, 
greedy  of  knowledge,  a  stern  husband  of  time,  a 
reader,  a  writer,  unflagging  in  his  task  of  self 
improvement. " 

Such  a  man  will  overcome  all  lack  of  early 
advantages.  But  general  cultivation  to-day  is  so 
widespread,  that  the  man  who  enters  upon  his  life 
work  with  a  mere  technical  training,  when  he 
comes  in  competition  with  men  of  broad  culture 
is  at  a  decided  disadvantage. 

That  the  faculty  of  this  institution  shares  these 


80  The  Changing  Order 

views  is  demonstrated  by  this  announcement  in 
the  Register: 

The  desirability  of  a  liberal  training  for  an  engineer 
has  led  the  University  to  offer  courses  in  which,  by 
combining  the  studies  of  the  several  technical  depart- 
ments with  the  work  of  the  course  in  arts  and  science, 
a  student  may  gain  both  a  literary  and  professional 
education,  with  the  corresponding  degrees,  in  six  years. 

That  this  is  not  an  extravagant  expenditure 
of  time  will  be  appreciated  when  it  is  considered 
that  the  work  of  a  course  in  arts  and  law  requires 
seven  years,  and  in  arts  and  medicine  eight. 

To  quote  the  Register  again: 

These  courses  possess  decided  advantages  over  the 
usual  engineering  curriculum  of  four  years,  the  studies 
of  which  are  necessarily  almost  wholly  technical,  and 
the  value  of  the  wider  training  for  which  they  provide 
far  outweighs  the  extra  expenditure  of  time. 

The  combination  of  the  ideals  of  purely  technical 
study  with  broad  university  culture,  offers  to 
students  the  opportunity  of  becoming  not  merely 
engineers,  but  educated  gentlemen. 

I  have  thus  far  dwelt  only  upon  the  practical 
advantages  of  this  broader  than  merely  technical 
education.  But  the  refining  influence  and  the  in- 
tellectual pleasures  opened  by  such  study  should 
not  be  lost  sight  of. 

James  Russell  Lowell  once  exclaimed  out  of  the 
fullness  of  his  scholarly  mind: 


Engineering  and  Culture  81 

"Neither  would  I  have  you  neglect  the  humani- 
ties. I  would  wish  that  every  one  of  you  could 
enjoy  in  the  originals,  Homer  and  Virgil  and 
Dante  and  Rabelais  and  Goethe."  In  an  essay 
written  shortly  before  his  death  he  revised  this 
list  somewhat,  and  characterized  Homer,  Dante, 
Shakespeare,  Cervantes,  and  Goethe  as  "the  five 
indispensable  authors. "  Certainly  if  the  work  of 
any  one  of  them  were  eliminated  from  our  litera- 
ture and  speech,  there  would  be  ragged  spaces  in 
the  fabric. 

Is  it  not  then  well  worth  the  time  and  effort 
of  an  engineer  or  a  chemist,  as  well  as  of  a  lawyer 
or  doctor,  to  study  and  know  the  works  of  these 
great,  these  indispensable  authors?  From  them 
each  of  us  may  catch  something  of  their  knowledge, 
their  insight,  their  inspiration;  and  with  quick- 
ened imagination  and  sharpened  perceptions  may 
more  clearly  see  the  solution  of  problems  which 
have  baffled  us.  As  the  sage  of  Israel  long  ago 
declared : 

Wisdom  is  the  principal  thing;  therefore  get  wis- 
dom, and  with  all  thy  getting  get  understanding.  .  .  . 
Take  fast  hold  of  instruction,  let  her  not  go,  keep  her; 
for  she  is  thy  life. 

6 


VII 


THE  STUDY   OF  LAW  AND  THE   WORK 
OF  LAWYERS1 

THERE  can  be  no  higher  mission  in  life  than 
the  work  of  educating  men  in  a  knowledge  of 
the  laws  of  our  country,  unless  we  regard  law  merely 
as  described  in  Blackstone's  definition,  "a  rule 
of  civil  conduct  prescribed  by  the  supreme  power 
in  a  state,  commanding  what  is  right  and  pro- 
hibiting what  is  wrong. " 2  But  if  we  consider  our 
laws  as  the  expression  of  the  will  of  God  working 
through  his  people — the  manifestation  of  their 
sense  of  right  and  justice;  sometimes,  as  is  true 
of  all  human  institutions,  clouded  by  misunder- 
standing and  misapplication,  but  always,  in  so  far 
as  they  are  permanent  and  vital,  reaching  out  to 
establish  justice  and  insure  domestic  tranquillity, 
then  we  come  to  a  realization  that  the  study  of  the 
law  has  a  higher  aim  than  the  mere  ascertainment 
of  police  regulations. 

No  better  description  ever  has  been  given  of  the 

1  Substance  of  an  address  before  the  Law  School  of  Georgetown 
University. 

2  i  Bl.  Com.,  p.  44. 

82 


The  Study  of  Law  83 

Anglo-Saxon  conception  of  law  than  that  embodied 
in  the  quaint  language  of  the  statute  25  Henry  VIII, 
c.  21  j  in  which  the  Parliament  addressed  the  King 
in  these  words: 

This  your  grace's  realm,  recognizing  no  superior 
under  God  but  only  your  grace,  hath  been  and  is  free 
from  subjection  to  any  man's  laws,  but  only  to  such  as 
have  been  devised,  made,  and  ordained  within  this 
realm,  for  the  wealth  of  the  same;  or  to  such  other 
as,  by  sufferance  of  your  grace  and  your  progenitors, 
the  people  of  this  your  realm  have  taken  at  their  free 
liberty,  by  their  own  consent,  to  be  used  among 
them;  and  have  bound  themselves  by  long  use  and 
custom  to  the  observance  of  the  same;  not  as  to 
the  observance  of  the  laws  of  any  foreign  prince, 
potentate,  or  prelate;  but  as  to  the  customed  and 
ancient  laws  of  this  realm,  originally  established  as 
laws  of  the  same,  by  the  said  sufferance,  consents,  and 
custom;  and  none  otherwise. * 

It  is  characteristic  of  the  thought  and  character 
of  our  British  ancestors,  that  side  by  side  with  a 
studied  courtesy  towards  their  sovereign,  there 
runs  through  this  statute  a  strain  of  conscious 
recognition  of  the  subjection  of  even  the  sovereign 
himself  to  the  will  of  the  people.  They  declare 
themselves  free  from  any  man's  laws  except  such 
as  have  been  devised,  made,  or  ordained  within 
the  realm  for  the  commonwealth,  and  such  as  by 
immemorial  custom  and  usage,  the  people  "have 

1 1  Bl.  Com.,  p.  80. 


84  The  Changing  Order 

taken  at  their  free  liberty,  by  their  own  consent 
to  be  used  among  them." 

This  is  the  language  of  a  people  who  three 
hundred  years  before  had  extorted  from  King 
John  the  solemn  covenant: 

No  free-man  shall  be  seized,  or  imprisoned,  or 
dispossessed,  or  outlawed,  or  in  any  way  destroyed; 
nor  will  we  condemn  him,  nor  will  we  commit  him  to 
prison,  excepting  by  the  legal  judgment  of  his  peers, 
or  by  the  laws  of  the  land. 

To  none  will  we  sell,  to  none  will  we  deny,  to  none 
will  we  delay  right  or  justice. 

A  covenant  solemnly  made,  sworn,  and  sealed — 

that  the  men  in  our  kingdom  have  and  hold  the  afore- 
said liberties,  rights,  and  concessions,  well  and  in  peace, 
freely  and  quietly,  fully  and  entirely,  to  them  and 
their  heirs,  of  us  and  our  heirs,  in  all  things  and  places 
forever,  as  is  aforesaid. r 

The  conception  that  the  people  themselves  are 
the  source  of  law  as  well  as  of  government;  that 
kings  are  but  one  kind  of  symbol  of  popular 
sovereignty,  and  that — 

when  a  long  train  of  abuses  and  usurpations,  pursuing 
invariably  the  same  object,  evinces  a  design  to  reduce 
them  [the  people]  under  absolute  despotism,  it  is  their 
right,  it  is  their  duty,  to  throw  off  such  government, 
and  to  provide  new  guards  for  their  future  security, 

1  Magna  Charta,  Barrington,  Phila.,  1900,  pp.  239,  250. 


The  Study  of  Law  85 

found  its  most  concrete  formulation  in  that  passage 
in  the  Declaration  of  American  Independence 
which  is  inextricably  interwoven  into  the  woof  and 
fabric  of  American  institutions : 

We  hold  these  truths  to  be  self-evident,  that  all  men 
are  created  equal;  that  they  are  endowed  by  their 
Creator  with  certain  unalienable  rights;  that  among 
these,  are  life,  liberty,  and  the  pursuit  of  happiness. 
That,  to  secure  these  rights,  governments  are  insti- 
tuted among  men,  deriving  their  just  powers  from 
the  consent  of  the  governed. 

Among  a  people,  therefore,  whose  laws  are  self- 
imposed — made  by  themselves  for  their  common 
weal,  or  by  which  they  have  bound  themselves  by 
immemorial  usage  and  custom ;  and  whose  govern- 
ment is  created  by  themselves  and  for  themselves — 
a  knowledge  of  domestic  laws  and  institutions  is 
essential  to  a  continuance  of  liberty  and  justice. 

This  was  well  understood  by  those  who  estab- 
lished our  form  of  government.  Washington, 
in  his  Farewell  Address,  advised  posterity  to  resist 
"the  spirit  of  innovation  upon  its  principles 
however  specious  the  pretexts,"  especially  warn- 
ing against  alterations  in  the  form  of  the  Constitu- 
tion "which  will  impair  the  energy  of  the  system 
and  thus  undermine  what  cannot  be  directly 
overthrown."  The  best  advice  he  could  give  as 
to  the  means  of  preventing  this  impairment  and 
ultimate  destruction,  was  to  promote  "as  an 
object  of  primary  importance,  institutions  for  the 


86  The  Changing  Order 

general  diffusion  of  knowledge."  For,  he  de- 
clared, "in  proportion  as  the  structure  of  a  govern- 
ment gives  force  to  public  opinion,  it  is  essential 
that  public  opinion  be  enlightened." 

I  take  it,  therefore,  that  the  object  of  all  properly 
conducted  law  schools  throughout  our  country, 
is  not  merely  to  train  artisans  in  the  law  to  exercise 
their  mechanical  functions  as  attorneys,  but  to 
teach  the  young  men  of  this  land  the  principles  of 
the  laws  by  which  we  govern  ourselves,  and  the 
history  and  the  nature  of  our  institutions,  to  the 
end  that  there  may  be  disseminated  among  our 
people  such  an  understanding  that  enlightened 
public  opinion  may  control  the  enforcement  of  our 
laws,  the  administration  of  our  government,  and 
all  projects  for  the  amendment  or  alteration  of 
laws  or  institutions. 

In  that  charming  old-fashioned  novel,  Ten 
Thousand  a  Year,  Dr.  Warren  describes  a  conversa- 
tion between  his  hero,  Mr.  Aubrey,  who  had  been 
robbed  of  his  estates  by  the  chicaneries  of  the 
attorneys,  Quirk,  Gammon,  &  Snap,  and  the 
Attorney-General  of  England  whom  he  was  con- 
sulting as  to  the  advisability  of  taking  up  the 
practice  of  the  law  as  a  means  of  livelihood.  The 
Attorney-General  was  not  very  encouraging  as 
to  immediate  pecuniary  results. 

Certainly  [he  said]  I  have  no  cause  to  be  dissatisfied ; 
I've  done  pretty  well;  but  I  can  tell  you  that  eight 
years  passed  over  me  before  I  earned  enough  a 
year  to  pay  my  laundress! 


The  Study  of  Law  87 

I  wonder  how  many  men  would  prepare  them- 
selves for  the  practice  of  the  law  to-day  if  they 
believed  that  there  was  even  a  possibility  of 
having  to  wait  eight  years  before  earning  enough 
to  pay  the  laundress ! 

But,  the  Attorney-General  added — and  it  is 
true  to-day  and  here — "if  you  determine  to  get  on 
at  the  bar,  you  will." 

Certainly  [he  said]  law  is  difficult;  but  its  difficulty  is 
often  greatly  overrated,  especially  by  imperfectly  edu- 
cated, and  ill-disciplined,  quick,  sharp  men.  .  .  .  What 
is  wanted  is  a  clear  head ;  a  good  memory ;  strong  com- 
mon sense ;  fixity  of  purpose ;  an  aptitude  for  analysis 
and  arrangement:  before  these  combined,  the  difficul- 
ties of  law  fly  like  the  morning  mist  before  the  sun. x 

The  students  of  modern  American  law  schools 
are  not  left  to  haphazard  and  desultory  methods 
of  study  such  as  obtained  in  the  time  whereof  Dr. 
Warren  wrote.  At  an  earlier  time,  the  law  student 
in  England  enjoyed  facilities  of  study  that  in  the  lat- 
ter part  of  the  eighteenth  and  the  early  nineteenth 
century  fell  into  disuse.  Thus  Fortesque,  writing 
in  the  time  of  Henry  VI,  described  the  advantages 
enjoyed  by  the  students  of  law  at  that  time  in  Eng- 
land. The  place  of  their  study — the  Temple — 
he  noted  was 

much  more  commodious  and  proper  for  the  purpose 
than  any  University.     It  is  situated  near  the  King's 

1  Warren,  Ten  Thousand  a  Year,  Tauchnitz  Ed.,  1845,  vo*-  "•» 
p.  194. 


88  The  Changing  Order 

Palace  at  Westminster,  where  the  Courts  of  Law  are 
held,  and  in  which  the  Law- Proceedings  are  pleaded 
and  argued,  and  the  resolutions  of  the  Court,  upon 
cases  which  arise,  are  given  by  the  Judges,  men  of 
gravity  and  years,  well  read  and  practiced  in  the  laws, 
and  honored  with  a  degree  peculiar  to  them.  Here, 
in  Term-Time,  the  students  of  the  law  attend  in  great 
numbers,  as  it  were  to  public  schools,  and  are  there 
instructed  in  all  sorts  of  Law-Learning,  and  in  the 
practice  of  the  Courts:  .  .  .  the  place  of  the  study 
is  not  in  the  heart  of  the  city  itself,  where  the  great 
confluence  and  multitude  of  the  inhabitants  might 
disturb  them  in  their  studies ;  but  in  a  private  place, 
separate  and  distinct  by  itself,  in  the  suburbs,  near 
to  the  Courts  of  Justice  aforesaid,  that  the  students, 
at  their  leisure,  may  daily  and  duly  attend,  with  the 
greatest  ease  and  convenience.1 

This  is  an  apt  description  of  an  ideal  place  of 
study.  Whether  or  not  the  remainder  of  the 
narrative  would  appeal  to  a  modern  American 
student  may  be  questioned. 

Upon  festival  days  and  after  the  offices  of  the 
church  are  over,  they  employ  themselves  in  the  study 
of  sacred  and  prophane  history:  here  everything  which 
is  good  and  virtuous  is  to  be  learned:  all  vice  is  dis- 
couraged and  banished.  .  .  .  The  discipline  is  so 
excellent  that  there  is  scarce  ever  known  to  be  any 
picques  or  differences,  any  bickerings  or  disturbances 
amongst  them.2 

1  The  Laws  of  England,  Translation  by  A.  Amos,  Cambridge, 
1825,  pp.  178-79. 
3  Id.,  p.  186. 


The  Study  of  Law  89 

It  is  an  old  maxim  that  the  law  is  a  jealous 
mistress.  He  who  would  acquire  a  thorough 
knowledge  of  law  must  give  himself  to  it  heart  and 
soul.  Especially  during  his  novitiate  must  he 
literally  eat,  drink,  talk,  and  sleep  law.  He  should 
live  in  a  community  of  those  who  are  doing  the 
same.  His  effort  should  be  always  to  get  at 
the  underlying  principle  in  whatever  he  is  studying. 
That  principle  should  be  to  him  like  the  thread 
by  which  Theseus  successfully  escaped  the  laby- 
rinth. And  the  Ariadne,  from  whose  deft  fingers 
the  line  runs,  must  in  his  case  be  Clio,  the  Muse 
of  History.  The  laurel  wreath  she  wears  may  be 
won  from  her,  and  the  fame  of  the  student  pro- 
claimed through  her  trumpet,  only  if  the  papyrus 
in  her  hand  be  searched  diligently  and  its  record 
applied  wisely. 

But  the  students  should  not  be  left  to  wander 
unaided  through  the  wilderness  of  legal  literature. 
Wise  guides  must  be  furnished  them  for  their 
journey.  Warning  signs  should  be  erected  for  their 
benefit.  Their  footsteps  should  be  directed  along 
well  cut  paths.  In  their  progress  they  should 
remember  the  legend  of  the  sleeping  beauty  and 
"be  bold,  be  bold,  and  evermore  be  bold.  Be  not 
too  bold. "  They  should  study  thoroughly  before 
venturing  to  criticize  or  condemn.  They  must 
beware  of  rash  judgments.  The  statute  laws  of 
the  States  and  of  the  United  States  fill  many 
volumes.  The  unwritten  or  customary  law  is 
found  in  those  conceptions  of  right  and  justice 


90  The  Changing  Order 

which  are  the  result  of  a  thousand  years  of  civiliza- 
tion, and  which  have  found  authoritative  expres- 
sion in  many  thousands  of  judicial  opinions, 
recorded  in  thousands  of  volumes.  The  duty  of 
instructors  is  to  help  the  students  to  winnow  out 
of  this  mass  those  decisions  which  are  the  great 
beacon  lights  of  the  law,  and  which  once  thoroughly 
mastered  will  enlighten  their  understanding  to 
comprehend  the  law  in  its  entirety.  It  was  said 
of  Sir  George  Jessel,  one  of  the  greatest  judges 
England  ever  produced : 

His  learning  was  profound,  yet  he  was  no  mere 
follower  of  precedent,  no  mere  directory  of  cases. 
He  was  able  to  take  up  the  confused  mass  of  the  law 
and  mould  it  to  the  ends  of  justice. 

In  the  case  of  Re  Hallett 's  Estate x  he  delivered  one 
of  the  greatest  of  his  opinions.  In  the  course  of  it  he 
expressed  his  views  of  the  proper  use  of  authorities : 

The  only  use  of  authorities,  or  decided  cases 
is  the  establishment  of  some  principle  which  the 
Judge  can  follow  out  in  deciding  the  case  before 
him.  There  is,  perhaps,  nothing  more  important  in 
our  law  than  that  great  respect  for  the  authority 
of  decided  cases  which  is  shewn  by  our  tribunals. 
Were  it  not  for  that  our  law  would  be  in  a  most  dis- 
tressing state  of  uncertainty. 

Lord  Bowen  likened  the  common  law  to  an 
"arsenal  of  common-sense  principles,"  and  he  used 
1 13  Ch.  D.,  676. 


The  Study  of  Law  91 

that  arsenal,  whenever  possible,  to  overcome  mere 
technical  obstructions  to  justice,  by  the  applica- 
tion of  fundamental  principles  of  right  and  morals. 

"There  is  no  magic  at  all  in  formalities/ '  he 
contended. ■ 

In  most  cases,  when  a  supposed  rule  of  the  com- 
mon law  would  work  iniquity,  it  will  be  found  on 
careful  investigation  that  the  true  principle  has 
been  lost  sight  of,  and  has  become  encrusted  over 
by  a  later  growth  resulting  from  misunderstanding 
and  misapplication.  In  the  long  run  the  people's 
sense  of  justice  finds  expression  in  principles  of 
immutable  right. 

Yet  as  Lord  Bowen  said  in  Dashwood  v.  Magniac : 

It  is  not  a  valid  objection  to  a  legal  doctrine  that 
it  will  not  be  always  easy  to  know  whether  the  doctrine 
is  to  be  applied  in  a  particular  case.  The  law  has  to 
face  such  embarrassments. 

The  boldness  with  which  a  Jessel  or  a  Bowen 
applied  the  principles  of  the  law,  seemingly  care- 
less of  their  authority,  was  only  the  deft  skill  of 
an  expert  swordsman,  which  would  be  fatal  to  one 
of  less  adroitness. 

Plutarch  tells  us  that  even  the  great  Demos- 
thenes never  made  any  oration  on  the  sudden, 

and  that  oftentymes  when  he  was  sette  in  the  assem- 
ble, the  people  would  call  him  by  his  name,  to  say 
his  opinion  touching  the  matter  of  counsell  then  in 

1  Dashwood  v.  Magniac  (1891),  3  Ch.,  306. 


92  The  Changing  Order 

hand:  howbeit  that  he  never  rose  upon  their  call, 
unless  he  had  first  studied  the  matter  well  he  would 
speake  of.1 

I  would  that,  like  wise  old  Odysseus,  I  could  com- 
mand those  winged  words  that  move  the  hearts 
of  men  to  impress  upon  every  young  man  the 
importance  of  his  thoroughly  mastering  the 
principles  of  the  law  in  the  years  of  his  preparation 
for  the  bar.  The  law  is  not  an  exact  science,  and 
yet  it  is  not  absolutely  empirical.  It  is  founded 
upon  immutable  principles  of  morality  and  justice. 
The  application  of  those  principles  through  a  thou- 
sand years  of  Anglo-Saxon  civilization  has  gradually 
evolved  a  code  of  rules  which  can  be  understood 
only  by  a  knowledge  of  their  history.  Yet  in 
large  measure  they  are  felt,  recognized,  acted  upon, 
believed  in  by  thousands,  hundreds  of  thousands 
of  people  who  know  nothing  of  their  origin,  but 
recognize  in  them  a  practicable  standard  of  con- 
duct. But  a  lawyer  must  know  more  about  them. 
He  must  know  what  principle  is  generally  applica- 
ble to  a  given  state  of  facts,  so  that  with  this 
governing  principle  in  mind,  he  may  turn  to  ad- 
judged cases  and  statutes  to  determine  the  precise 
application  of  the  principle  which  the  given  cir- 
cumstances require.  Such  ready  command  is 
only  possible  if  one  have  a  thorough  familiarity 
with  the  history  of  the  origin,  growth,  and  develop- 
ment of  the  law  sought  to  be  applied. 

1  North's  Plutarch,  v.,  p.  288. 


The  Study  of  Law  93 

It  was  said  of  Judge  Cooley  that  his  "remark- 
able success  as  a  law  writer  was  largely  due  to  his 
ability  to  extract  from  a  multitude  of  cases  the 
essential  principles  involved,  to  arrange  them  in 
logical  order,  and  to  state  them,  with  the  reason- 
ing on  which  they  were  based,  accurately,  clearly, 
and  briefly.  "x 

The  same  ability  would  lead  to  like  success  in  a 
counsel  or  an  advocate. 

A  biographer  of  Judge  Jeremiah  S.  Black  re- 
cords: 

The  keynote  of  his  method  is  probably  to  be  found 
in  his  own  remarks  upon  his  despair  when  first  set  to 
study  the  law.  His  heart  sank  within  him  when  he 
first  saw  the  tools  he  must  handle,  the  multiplicity 
of  those  sources  from  which  he  must  draw  his  knowl- 
edge of  the  law.  "  I  did  not  know  the  value  of  general 
principles,  or  how  legal  problems  could  be  solved  by 
the  application  of  fundamental  maxims."  Through 
the  pain  and  perplexity  of  the  following  years  he 
had  learned  that  lesson.  ...  It  was  not  ignorance 
of,  but  mastery  over,  precedent,  which  made  him 
apparently  independent  of  the  authority  of  decided 
cases,  and  freed  his  recorded  decisions  from  the  useless 
multiplication  of  citations  upon  points  which  he  knew 
to  be  no  longer  questionable.2 

A  like  absence  of  the  use  of  precedents  is 
noticeable  in  the  opinions  of  Chief  Justice  Mar- 

1  Dean  Hutchins,  in  Great  American  Lawyers,  vol.  vii.,  p.  480. 

2  Margaret  S.  Klinglesmith,  in  Great  American  Lawyers,  vol. 
vi.,  p.  13. 


94  The  Changing  Order 

shall.  "Brother  Story  will  furnish  the  authori- 
ties," he  is  said  to  have  observed,  after  having 
delivered  one  of  his  matchless  expositions  of  the 
law. 

The  young  men  now  engaged  in  the  study  of  the 
law  in  our  leading  American  law  schools  are 
fortunate  in  the  opportunities  for  public  service 
which  their  studies  will  afford  them,  whether  they 
shall  be  applied  as  a  means  of  livelihood  in  the 
practice  of  the  profession,  or  as  a  means  of  helping 
to  create  that  enlightened  public  sentiment  upon 
which  so  absolutely  depends  the  permanence  of 
free  institutions. 

It  has  often  been  said  of  the  United  States  that 
it  is  a  nation  of  lawyers;  and  when  the  part 
played  by  lawyers  in  the  molding  and  preserva- 
tion of  our  institutions  is  considered,  the  charac- 
terization may  be  accepted  as  just.  Yet  it  is  a 
matter  of  common  remark  that  lawyers  to-day 
do  not  enjoy  the  influence  which  they  formerly 
possessed.  The  explanation  is  not  far  to  seek. 
During  the  quarter  of  a  century  just  past,  the  great- 
est pecuniary  rewards  for  lawyers  were  earned  in 
the  application  of  legal  knowledge  and  skill  in 
the  organization  and  conduct  of  great  commercial 
enterprises  in  corporate  form,  and  they  too  often 
were  led  to  become  either  the  business  associates, 
or  the  salaried  employees  of  their  clients,  thereby 
losing  their  distinctive  position  as  counsel,  taking 
on  the  nature  of  joint  adventurers,  contributing 


The  Study  of  Law  95 

their  knowledge  and  capacity  to  the  capital  of  a 
given  enterprise,  and  sharing  with  their  associates 
not  only  in  the  pecuniary  success  or  failure,  but  in 
the  resultant  public  criticism. 

The  period  since  the  close  of  the  Civil  War  has 
been  one  of  the  most  extraordinary  industrial 
and  commercial  development  ever  known  in  any 
land  during  any  other  period  of  equal  length  in 
recorded  history.  The  natural  development  of 
our  great  resources  was  aided  by  wonderful  dis- 
coveries in  science,  and  the  application  of  them  to 
mining,  manufacture,  transportation,  and  dis- 
tribution of  product.  Bold  and  skillful  men  seized 
upon  the  opportunities  thus  presented  to  realize, 
and  they  did  realize  from  the  public,  profits  beyond 
the  wildest  dreams  of  earlier  imagination. 

Able  lawyers,  with  specialized  training,  devised 
the  legal  machinery  by  which  these  great  enter- 
prises were  organized,  developed,  and  combined, 
and  through  which  vast  industries  were  brought 
under  centralized  control. 

An  absence  of  the  personal  responsibility  which 
inheres  in  partnership  relation,  continuity  of 
existence  irrespective  of  changing  individual  inter- 
ests, and  the  ability  to  split  up  interests  in  the 
capital  of  an  undertaking,  and  to  dispose  of  any 
part  at  will  without  affecting  the  legal  entity,  were 
necessary  to  enable  these  great  businesses  to  be 
promoted,  and  vast  projects  realized.  These 
results  were  secured — they  could  only  be  secured — 
through  legislative  action.     States  vied  with  each 


96  The  Changing  Order 

other  in  offering  facilities  for  corporate  organiza- 
tion. Some  of  them  virtually  offered  the  boon  of 
perpetual  corporate  life  with  power  to  do,  not 
merely  all  that  an  individual  could  do,  but  things 
which  no  individual  could  have  dreamt  of  doing, 
and  with  no  accountability  to  any  one  for  any 
acts  done.  What  amounted  to  partnerships  be- 
tween corporations,  without  the  characteristic 
liability  of  partners  for  the  debts  of  the  firm,  were 
authorized,  fostered,  and,  encouraged.  The  most 
efficient  instruments  for  the  creation  of  monopoly 
were  handed  over  the  counter  of  every  State 
Legislature. 

But  when  the  people  began  to  take  alarm  at  the 
growing  power  of  such  organizations,  it  was  the 
lawyers  of  the  country  who  suggested  remedies  for 
the  evil,  to  be  worked  out  by  the  application  of 
old  established  principles  to  the  new  conditions. 
The  people  in  many  States  had  generously,  even 
recklessly,  conferred  the  privilege  and  convenience 
of  corporate  machinery.  But  by  the  exercise  of  the 
power  of  amendment,  wisely  reserved  in  most  char- 
ters, it  was  found  that  the  people  might  restrain 
and  correct  abuses  of  privileges  they  had  granted. 
The  power  to  regulate  commerce  among  the  States 
and  with  foreign  nations  had  been  conferred  upon 
the  national  government  by  the  Constitution  of  the 
United  States.  Commerce  was  recognized  by 
the  highest  judicial  authority  as  having  a  compre- 
hensive meaning  far  more  extensive  than  mere 
trade.     It  embraced  all  forms  of  intercourse,  and 


The  Study  of  Law  97 

the  power  to  regulate  it  involved  the  establishment 
of  rules  by  which  such  intercourse  should  be 
governed.  No  State  under  the  guise  of  creating 
a  corporation  could  charter  a  commercial  libertine 
against  the  paramount  control  of  Congress  over 
interstate  and  foreign  commerce.  There  was 
another  principle  of  the  common  law,  too,  the 
application  of  which,  it  began  to  be  realized,  was 
not  limited  to  any  particular  field,  but  was  co- 
extensive with  the  principle  itself.  This  was  the 
principle  formulated  by  Lord  Chief  Justice  Holt 
upwards  of  two  hundred  years  ago1  quoted  by 
Chief  Justice  Waite  in  support  of  a  famous  decision 
of  the  Supreme  Court  of  the  United  States  that  a 
State  may  regulate  the  charges  of  a  warehouseman 
for  the  storage  of  wheat.2 

That  principle  he  stated  in  these  words: 

Property  does  become  clothed  with  a  public  interest 
when  used  in  a  manner  to  make  it  of  public  conse- 
quence, and  affect  the  community  at  large.  When, 
therefore,  one  devotes  his  property  to  a  use  in  which 
the  public  has  an  interest,  he,  in  effect,  grants  to  the 
public  an  interest  in  that  use,  and  must  submit  to  be 
controlled  by  the  public  for  the  common  good,  to  the 
extent  of  the  interest  he  has  thus  created.  He  may 
withdraw  his  grant  by  discontinuing  the  use ;  but,  so  long 
as  he  maintains  the  use,  he  must  submit  to  the  control. 

The  announcement  of  this  decision  in  1876 
helped  to  pave  the  way  for  the  enactment  of  the 

1  In  De  Portibus  Maris,  i  Harg.  Law  Tracts,  78. 
3  Munn  v.  Illinois,  94  U.  S.,  113. 
7 


98  The  Changing  Order 

first  act  for  the  regulation  of  interstate  commerce 
in  1887,  and  the  succession  of  statutes  affecting 
the  management  of  interstate  railways  enacted 
by  Congress  in  subsequent  years.  The  Sherman 
Anti-trust  Law  of  1890,  sought  to  apply  the  power 
to  regulate  commerce  in  such  manner  as  to  check 
the  tendency  of  the  great  industrial  organizations 
to  effect  monopolies,  and  to  prohibit  contracts, 
combinations,  and  conspiracies  in  restraint  of 
interstate  and  international  commerce. 

The  work  of  such  eminent  lawyers  as  Reagan  and 
Cullum,  Edmunds,  Thurman,  Hoar,  Sherman,  and 
Cooley,  attest  the  influence  of  the  educated  lawyer 
in  dealing  with  these  great  fundamental  problems 
of  national  economics.  Judicial  decision  has 
affirmed  the  soundness  of  the  principles  thus 
invoked  in  their  application  to  the  problems  dealt 
with  by  legislative  action.  Perhaps  the  full  effect 
of  the  principle  of  legislative  control  over  property 
affected  with  a  public  use  has  not  yet  been  fully 
grasped.  But  it  may  be  suggested  that  in  that 
principle  lies  a  means  for  the  effectual  protection 
of  the  public  from  injury  or  destruction  through 
any  form  of  industrial  organization  which  is  so 
used — to  employ  the  language  of  Chief  Justice 
Holt — as  to  make  it  a  matter  of  public  consequence, 
and  to  affect  the  community  at  large. 

The  thought  and  the  work  of  the  great  lawyers 
I  have  named,  and  of  many  others  in  less  con- 
spicuous fields,  who  wrought  out  solutions  of  these 
vast  problems,  should  redeem  the  profession  from 


The  Study  of  Law  99 

the  reproach  of  being  merely  the  trained  experts 
of  selfish  forces.  But  the  conspicuous  pecuniary 
rewards  of  those  who  were  identified  with  the  great 
corporate  interests  have  been  used  to  fill  the  pop- 
ular mind  with  distrust  of  an  entire  class,  and  for 
a  time  even  the  disinterested  and  devoted  labors 
of  such  men  as  I  have  mentioned,  could  not  redeem 
the  bar  from  the  reproach  of  being  antagonistic  to 
the  interests  of  the  people.  Perhaps  the  envy 
of  the  unsuccessful  and  the  unskilled  also  has  con- 
tributed somewhat  to  discredit  their  more  able  or 
more  prosperous  professional  brethren.  Be  that 
as  it  may,  the  great  opportunity  that  is  open  to  the 
men  entering  upon  the  profession  of  law  to-day  is 
to  reinstate  it  in  the  place  to  which  it  is  entitled, 
by  learning,  by  character,  and  by  usefulness,  in 
any  community  in  which  popular  government  is 
established  and  maintained. 

There  are  many  avenues  open  through  which 
this  may  be  accomplished — open  not  only  to  them 
who  adopt  the  practice  of  law  as  a  means  of  liveli- 
hood, but  to  them  who  shall  enter  into  public  life 
and  become  legislators  or  administrators  in  the 
government  of  the  State  or  the  Nation,  and  to 
them  who  in  business  or  private  life  may  use  and 
apply  the  lessons  learned  in  this  institution. 

In  a  certain  sense,  the  greatest  opportunity 
is  that  of  the  practitioner.  His  life  will  afford 
him  constant  opportunity  to  test  the  practical 
value  of  theory.  His  danger  will  be  the  tendency 
to  lose  sight  of  the  ethical  aim  of  all  law  in  the 


ioo  The  Changing  Order 

intense  technical  interest  of  the  game.  Lawyers 
are  not  only  by  nature  and  training  conservative, 
but  they  are  apt  to  become  so  enamored  of  the 
technical  skill  involved  in  legal  procedure,  as  to  lose 
sight  of  the  fact  that  rules  of  practice  are  devised 
merely  to  the  end  that  litigants  may  present  the 
merits  of  their  controversy  to  a  tribunal  for  de- 
cision, in  the  simplest,  most  expeditious  mode  con- 
sistent with  apprising  each  of  the  contention  of  the 
other,  and  giving  him  an  opportunity  to  prepare 
for  the  trial.  The  old  English  lawyers  made  a 
fetish  of  pleading — the  written  statements  of  their 
case  made  by  the  respective  litigants  in  advance 
of  trial.  The  modern  American  lawyers  have  made 
a  fetish  of  procedure,  and  have  created  a  mass  of 
artificial  rules  which  in  some  States  presents  as 
great  an  obstacle  to  reaching  the  judgment  seat, 
as  did  the  common  law  rules  of  pleading  before  the 
English  judicature  reform  acts. 

It  will  be  the  high  privilege  of  the  young  men 
now  coming  into  the  profession  to  contribute  to  the 
work  of  clearing  away  this  mass  of  worse  than 
useless  machinery,  and  of  substituting  a  few  simple 
regulations  for  the  legislative  minutiae  that  now 
make  up  our  codes  of  procedure.  But  to  the 
effective  accomplishment  of  such  reform,  an  ac- 
curate knowledge  of  conditions  and  requirements 
is  indispensable.  More  harm  is  done  by  ill-con- 
sidered reforms  than  by  a  continuance  of  existing 
evils.  It  is  always  important,  too,  that  changes 
in  law  or  procedure  shall  be  developed  along  lines 


The  Study  of  Law  101 

of  established  and  well-recognized  principles, 
rather  than  across  the  grain,  as  it  were,  with  no 
continuity  between  the  new  regulation  and  the 
old. 

Finally,  may  I  add,  that  all  law  to  be  effective 
must  be  based  on  a  broad  sense  of  right.  It  is 
that  fact  which  gives  to  the  customary  or  unwritten 
law  a  greater  sanctity  in  the  minds  of  the  people 
than  acts  of  the  Legislature. 

The  greatest  safeguard  of  popular  liberty  lies 
in  the  inherent  respect  for  their  law  felt  by  a  self- 
governing  people.  The  enactment  of  statutes 
which  are  not  based  upon  eternal  principles  of 
justice,  but  upon  mere  temporary  or  class  expedi- 
ents, tends  to  impair  or  destroy  this  attitude  of  the 
people  towards  their  law. 

Respect  for  law  is  the  Alpha  and  the  Omega  of 
a  free  government.  That  respect  can  exist  only 
when  the  law  is  that  which  the  people  establish 
"at  their  free  liberty,"  which  is  just  to  all  classes, 
and  which  binds  the  hearts  and  the  con- 
sciences of  men  to  respect  even  the  law  they  may 
violate. 

With  such  laws  in  the  hearts  of  the  people  and 
on  their  statute  books,  we  may  say  as  did  the 
great  lawgiver  of  Israel : 

Keep  therefore  and  do  them ;  for  this  is  your  wisdom 
and  your  understanding  in  the  sight  of  the  nations, 
which  shall  hear  all  these  statutes,  and  say  Surely  this 
great  nation  is  a  wise  and  understanding  people. 

For  what  nation  is  there  so  great,  who  hath  God  so 


102  The  Changing  Order 

nigh  unto  them,  as  the  Lord  our  God  is  in  all  things 
that  we  call  upon  him  for? 

And  what  nation  is  there  so  great,  that  hath  statutes 
and  judgments  so  righteous  as  all  this  law,  which  I  set 
before  you  this  day?  x 

1  Deut.  iv.,  6,  7,  8. 


VIII 

RECENT  INTERPRETATION   OF   THE 
SHERMAN  ACT  " 

THE  only  legitimate  end  and  object  of  all 
government  is  the  greatest  good  of  the 
greatest  number  of  the  people.  The  means  by 
which  this  end  is  attained,  vary  in  accordance  with 
the  experience  and  the  temperament  of  the  people. 
Government  is  necessarily  more  or  less  of  an 
experiment  at  all  times,  but  as  men  have  been 
making  similar  experiments  since  the  dawn  of 
recorded  history,  the  waste  of  repeating  unsuccess- 
ful experiments  of  the  past  may  be  avoided  by 
studying  the  records  of  the  results  of  earlier 
effort.  Other  things  being  equal,  all  thoughtful 
persons  will  agree,  the  probabilities  of  success 
will  be  greater  if  action  be  taken  along  lines 
which  in  the  past,  under  similar  conditions,  has 
been  attended  with  benefit  to  the  common  weal. 
All  history  demonstrates  the  fact  that  the  great- 
est prosperity  to  the  State  has  resulted  from 
allowing  to  individual  effort  in  trade  and  com- 

1  Address  before  the  Michigan  State  Bar  Association,  Battle 
Creek,  Mich.,  July  6,  191 1. 

103 


104  The  Changing  Order 

merce  the  utmost  freedom  consistent  with  the 
protection  of  society  at  large. 

Yet  the  experience  of  the  remote,  as  well  as  of 
the  recent  past,  demonstrates  the  necessity  of  some 
governmental  regulation  of  private  enterprise,  in 
order  that  the  fruits  of  industry  may  not  be  entirely 
garnered  into  a  few  hands,  and  that  the  freedom 
of  individual  effort  may  not  be  unduly  restrained. 

We  need  look  no  further  than  to  the  history  of 
England,  from  which  we  derive  most  of  our  con- 
ceptions of  civil  liberty,  for  evidence  of  the  char- 
acter of  evils  affecting  trade  and  commerce  which 
commercial  prosperity  tends  to  develop,  and  of  the 
methods  which  have  proved  most  effective  in 
restricting  those  evils. 

The  first  statute  enacted  in  England  in  1436 
against  agreements  in  restraint  of  trade1  was 
directed  against  regulations  made  "by  persons  in 
confederacy"  for  their  " singular  profit  and  the 
common  damage  of  the  people. "  Note  that  even 
at  that  early  date,  the  action  of  the  Legislature  was 
directed  at  curbing  the  selfish  exercise  of  power  by 
a  few  for  their  own  benefit,  but  to  the  common 
damage  of  the  people. 

The  considerations  upon  which  contracts  in 
restraint  of  trade  were  held  void  at  common  law, 
as  our  Supreme  Court  has  often  pointed  out,  were : 
(1)  the  injury  to  the  public  by  being  deprived  of  the 
restricted  party's  industry;  and  (2)  the  injury  to 
the  party  himself  by  being  precluded  from  pur- 

1 15  Henry  VI,  re-enacted  1503,  19  Henry  VI,  c.  7. 


Recent  Interpretation  of  Sherman  Act  105 

suing  his  occupation,  thus  tending  to  make  him 
more  or  less  of  a  public  charge. l  In  the  case  of  a 
corporation  chartered  by  a  State  to  carry  on  a 
particular  business,  any  agreement  voluntarily  en- 
tered into  by  it  which  impaired  or  restricted  in 
any  material  degree  its  power  to  discharge  the 
functions  conferred  upon  it  by  the  State,  was 
necessarily  contrary  to  public  policy  and  void. 2 

Monopolies  in  trade  have  been  at  all  times,  under 
all  forms  of  government,  regarded  as  obnoxious 
to  the  general  welfare.  They  were  early  declared 
to  be  contrary  to  the  law  of  England,  and  the 
outburst  of  popular  resentment  to  the  grant  by 
Queen  Elizabeth  to  certain  of  her  favorites  of  the 
exclusive  right  of  dealing  in  particular  commodi- 
ties, compelled  even  that  powerful  monarch  to 
disclaim  any  intention  to  offend  against  the  popu- 
lar sense  of  right  and  justice  of  her  subjects,  and 
to  blame  her  advisers  for  the  acts  which  she 
formally  disavowed.3 

The  vice  of  monopoly  was  recognized  in  England 
to  be  the  power  acquired  by  the  monopolist  to 
control  prices  by  excluding  competition.  With 
the  great  development  of  the  vast  natural  re- 
sources of  a  new  country,  and  the  unprecedented 
powers  conferred  by  State  legislation,  throughout 
the  United  States,  upon  associations  of  individuals 
under  corporate  form,  the  opportunity  and  the 

1  Gibbs  v.  Baltimore  Gas  Co.,  130  U.  S.,  396,  409. 

*  People  v.  N.  River  Sugar  Ref.  Co.,  54  Hun.,  354. 

*  D'Ewes,  Journal  of  the  Parliaments  of  Elizabeth,  p.  652. 


106  The  Changing  Order 

machinery  for  the  centralization  of  control  over 
great  industries  proved  so  tempting  to  cupidity, 
that  twenty  odd  years  ago,  even  so  busy,  self- 
satisfied  a  people  as  the  prosperous  citizens  of  these 
United  States,  was  aroused  to  the  necessity  of 
checking  the  rapid  tendency  to  the  concentration 
of  control  of  great  industries  in  a  few  hands. 
While  the  State  Courts  and  Legislatures  attempted 
to  deal  with  the  subject,  it  was  soon  recognized 
that  only  the  National  Government  could  ade- 
quately grapple  with  an  evil  which  had  become 
national  in  its  extent.  The  simple  but  unlimited 
power  vested  in  Congress  "to  regulate  commerce 
with  foreign  nations  and  among  the  several  States 
and  with  the  Indian  tribes, "  furnished  the  general 
government  with  sufficient  jurisdiction  to  protect 
the  commerce  of  the  nation  from  undue  restraints 
and  monopolization. 

So  the  act  of  July  2,  1890,  was  passed,  declaring 
in  terms  so  comprehensive,  yet  so  simple  that  it 
has  required  two  decades  of  judicial  exposition  to 
bring  their  meaning  home  to  the  people  with  living 
force,  that  "  every  contract,  combination  in  the 
form  of  trust  or  otherwise,  or  conspiracy  in  re- 
straint of  commerce  among  the  States,  or  with 
foreign  nations,"  is  illegal,  and  that  every  person 
who  shall  monopolize  or  attempt  to  monopolize 
any  part  of  such  trade  or  commerce,  is  guilty  of  a 
misdemeanor;  and  that  the  United  States  Circuit 
Courts  sitting  in  equity  shall  have  jurisdiction,  at 
the  suit  of  the  United  States,  to  prevent  and  re- 


Recent  Interpretation  of  Sherman  Act  107 

strain  all  violations  of  the  act.  Very  slowly  indeed 
has  a  full  consciousness  of  the  meaning  of  this  law 
come  over  the  intelligence  of  the  American 
people.  The  first  effort  to  apply  it,  in  the  Knight 
case,1  proved  abortive,  partly  because  of  an 
imperfect  recognition  of  the  remedies  which 
should  have  been  sought;  partly  because  of  a  too 
narrow  conception  of  the  extent  of  Congressional 
power  over  interstate  commerce. 

It  was  then  successfully  directed  in  the  Trans- 
Missouri2  and  the  Joint  Traffic  Association3  cases 
against  agreements  between  interstate  railroads 
made  to  control  rates  of  interstate  transportation ; 
but  an  extreme  statement  of  the  meaning  of 
the  phrase  "restraint  of  trade"  enunciated  in  the 
opinions  of  the  court  in  those  cases,  became  the 
basis  of  a  school  of  literal  interpretation  which 
seemed  bent  upon  reducing  the  law  to  an  absurdity, 
and  thus  creating  a  public  sentiment  which  would 
make  impossible  its  enforcement.  Yet  the  author 
of  those  opinions,  in  the  second  of  them,  rejected 
with  some  sarcasm  the  interpretation  sought  to 
be  placed  upon  his  language  in  the  earlier  one. 
Observing  at  the  outset  that  no  contract  of  the 
nature  described  by  counsel  as  those  which  he  sug- 
gested, would  be  invalidated  by  the  application  of 
the  meaning  given  by  the  Court  to  the  words  of  the 
act,  was  before  the  Court  in  the  case  under  con- 
sideration, and  that  there  was,  therefore,  some 
embarrassment  in  assuming  to  decide  just  how  far 

•  156  U.  S.,  1.  "  166  U.  S.,  290.  s  171  U.  S.f  506. 


108  The  Changing  Order 

the  act  might  go  in  the  direction  claimed,  Justice 
Peckham  said: 

Nevertheless,  we  might  say  that  the  formation  of 
corporations  for  business  or  manufacturing  purposes 
has  never,  to  our  knowledge,  been  regarded  in  the 
nature  of  a  contract  in  restraint  of  trade  or  commerce. 
The  same  may  be  said  of  a  contract  of  partnership. 
It  might  also  be  difficult  to  show  that  the  appointment 
by  two  or  more  producers  of  the  same  person  to  sell 
their  goods  on  commission  was  a  matter  in  any  degree 
in  restraint  of  trade.  We  are  not  aware  that  it  has 
ever  been  claimed  that  a  lease  or  purchase  by  a  farmer, 
manufacturer,  or  merchant,  of  an  additional  farm, 
manufactory,  or  shop,  or  the  withdrawal  from  business 
of  any  farmer,  merchant,  or  manufacturer,  restrained 
commerce  or  trade  within  any  legal  definition  of  that 
term ;  and  the  sale  of  a  goodwill  of  a  business  with  an 
accompanying  agreement  not  to  engage  in  a  similar 
business  was  instanced  in  the  Trans-Missouri  case  as  a 
contract  not  within  the  meaning  of  the  act ;  and  it  was 
said  that  such  a  contract  was  collateral  to  the  main  con- 
tract of  sale  and  was  entered  into  for  the  purpose  of  en- 
hancing the  price  at  which  the  vendor  sells  his  business. 

In  the  Addyston  Pipe  case1  it  was  held  that  the 
act  operated  to  invalidate  an  agreement  between 
members  of  an  association  of  corporate  manufac- 
turers of  iron  pipe,  made  for  the  purpose  of  con- 
trolling prices  by  suppressing  competition  among 
themselves.  Montague  v.  Lowry 2  was  to  the  same 
effect. 

* 175  U.  S.,  227.  9 193  U.  S.,  38. 


Recent  Interpretation  of  Sherman  Act  109 

In  the  Northern  Securities  case,  it  was  held  that 
control  of  two  competing  lines  of  interstate  railway 
could  not  be  acquired  by  vesting  a  majority  of  the 
stock  of  each  in  a  corporation  organized  under  the 
laws  of  New  Jersey,  without  violating  the  act. 
In  the  Swift  case,1  a  combination  between  com- 
petitors in  the  business  of  buying  and  shipping  live 
stock  and  converting  it  into  fresh  meats  for  human 
consumption,  suppressing  bidding  against  each 
other,  and  arbitrarily,  from  time  to  time,  raising, 
lowering,  and  fixing  prices,  and  combining  to  make 
uniform  charges  to  the  public,  was  also  held  within 
the  prohibition  of  the  statute. 

In  the  Danbury  hat  case, 2  a  combination  of  indi- 
viduals to  prevent  defendants  (manufacturers  of 
hats)  from  manufacturing  and  shipping  hats  in 
interstate  commerce  was  condemned;  and  in  the 
Continental  Wall  Paper  case,3  a  combination  of 
manufacturers  of  wall  paper,  fixing  prices  and 
providing  against  sales  except  under  agreements 
between  members  of  the  combination,  was  held 
to  violate  the  law. 

In  the  meantime,  certain  of  the  decisions  had 
drawn  a  line  of  differentiation,  by  holding  that  the 
act  was  not  intended  to  affect  contracts  which  have 
only  a  remote  and  indirect  bearing  upon  commerce 
between  the  States,4  and  that  a  covenant  by  the 
vendor  of  an  interstate  business  to  protect  the  pur- 

« 196  U.S.,  375. 

3Loewe  v.  Lawler,  218  U.  S.,  274.       3  212  U.  S.,  227. 
«  Field  v.  Barber  Asphalt  Co.,  194  U.  S.,  618;  Hopkins  v. 
United  States,  171  U.  S.,  578. 


no  The  Changing  Order 

chaser  from  competition  for  a  reasonable  period, 
made  as  a  part  of  the  sale  of  the  business  and  not  as 
a  device  to  control  commerce,  was  neither  within 
the  letter  nor  the  spirit  of  the  act.  * 

While  the  intent  of  parties  entering  into  a  par- 
ticular agreement  or  combination,  etc.,  was  held  to 
be  immaterial,  where  the  necessary  inference  from 
the  facts  was  that  the  direct  and  necessary  result 
of  the  agreement  was  to  restrain  trade ;  yet  in  the 
Swift  case,  Justice  Holmes  pointed  out  that  intent 
was  almost  essential  to  a  combination  in  restraint 
of  commerce  among  the  States,  and  was  essential 
to  an  attempt  to  monopolize  the  same. 

Where  acts  are  not  sufficient  in  themselves  to 
produce  a  result  which  the  law  seeks  to  give  them — 
for  instance,  the  monopoly — but  require  further  acts 
in  addition  to  the  mere  forces  of  nature  to  bring  that 
result  to  pass,  an  intent  to  bring  it  to  pass  is  necessary 
in  order  to  produce  a  dangerous  probability  that  it 
will  happen  ...  But  when  that  intent  and  the 
consequent  dangerous  probability  exist,  this  statute, 
like  many  others,  and  like  the  common  law  in  some 
cases,  directs  itself  against  that  dangerous  probability 
as  well  as  against  the  completed  result.2 

The  proceeding  against  the  American  Tobacco 
combination,  brought  before  the  Court  for  the  first 
time  the  question  of  the  full  interpretation  of  the 
statute  in  its  application  to  attempts  to  monopolize, 

1  Cincinnati  Packet  Co.  v.  Bay,  200  U.  S.,  179. 
a  Swift  &  Co.  v.  United  States,  196  U.  S.,  396. 


Recent  Interpretation  of  Sherman  Act  in 

and  in  deciding  the  case  in  the  Circuit  Court, 
Judge  Lacombe  expressed  the  extreme  view  of  the 
school  of  literal  interpretation,  by  asserting  that 
the  act  prohibited  every  contract  which  to  any 
extent  operated  to  restrain  competition  in  inter- 
state commerce. 

Size  [he  said]  is  not  made  the  test:  Two  individuals 
who  have  been  driving  rival  express  wagons  between 
villages  in  contiguous  States,  who  enter  into  a  com- 
bination to  join  forces  and  operate  a  single  line,  re- 
strain an  existing  competition;  and  it  would  seem 
to  make  little  difference  whether  they  make  such 
combination  more  effective  by  forming  a  partnership 
or  not.1 

On  the  other  hand,  Circuit  Judge  Hook,  in  the 
Standard  Oil  case,  decided  in  the  Eighth  Circuit 
after  the  decision  in  the  Tobacco  case,  said: 

The  construction  of  the  act  should  not  be  so  narrow 
or  technical  as  to  belittle  the  work  of  Congress,  but  on 
the  contrary  it  should  accord  with  the  great  import- 
ance of  the  subject  of  the  legislation  and  the  broad 
lines  upon  which  the  act  was  framed.  The  language 
employed  in  the  act  is  as  comprehensive  as  the  power 
of  Congress  in  the  premises,  and  the  purpose  was  not 
to  hamper  business  fairly  conducted,  but  adequately 
to  promote  the  common  interest  in  freedom  of  com- 
petition and  to  remove  improper  obstacles  from  the 
channels  of  commerce  that  all  may  enter  and  enjoy 
them.     The  wisdom  of  the  law  lies  in  its  spirit  as  well 

1 164  Fed.,  702, 


ii2  The  Changing  Order 

as  in  its  letter,  and  unless  they  go  together  in  its 
construction  and  application  justice  goes  astray. 

Speaking  of  the  application  of  the  second  section 
of  the  act,  he  added  that  the  modern  doctrine  with 
respect  to  monopoly  "is  but  a  recognition  of  the 
obvious  truth  that  what  a  government  should  not 
grant,  because  injurious  to  public  welfare,  the 
individual  should  not  be  allowed  to  secure  and 
hold  by  wrongful  means." 

This  being  the  state  of  the  law,  the  four  decisions 
involving  a  construction  of  the  act  rendered  by  the 
Supreme  Court  during  the  term  just  closed  are  of 
especial  interest. ■  The  first  case  decided  came  up 
on  writ  of  error,  brought  by  the  United  States  to 
reverse  a  judgment  of  the  Circuit  Court  in  New 
York  sustaining  pleas  in  bar  to  an  indictment  for 
conspiracy  to  restrain  interstate  commerce  in 
violation  of  the  first  section  of  the  act.2  The 
facts  stated  in  the  plea  showed  that  the  conspiracy 
had  been  originally  entered  into  more  than  three 
years  before  the  finding  of  the  indictment.  The 
Circuit  Court  had  held  that  the  crime  was  com- 
pleted as  soon  as  the  conspiracy  was  formed.  But 
the  indictment  charged  a  continuing  conspiracy 
to  eliminate  competition.    The  Court  said: 

A  conspiracy  to  restrain  or  monopolize  trade  by 
improperly  excluding  a  competitor  from  business 
contemplates  that  the  conspirators  will  remain  in 
business  and  will  continue  their  combined  efforts  to 

1  October  Term,  1910.  a  U.  S.  v.  Kissel,  218  U.  S.,  601. 


Recent  Interpretation  of  Sherman  Act  1 13 

drive  the  competitor  out  until  they  succeed.  If  they 
do  continue  such  efforts  in  pursuance  of  the  plan,  the 
conspiracy  continues  up  to  the  time  of  abandonment 
or  success. 

The  facts  set  forth  in  the  indictment  as  the 
means  by  which  the  alleged  purpose  was  to  be 
accomplished,  showed  that  the  acts  committed  by 
the  defendants  were  for  the  purpose  of  preventing 
a  competing  company  from  engaging  in  business; 
that  this  prevention  continued  and  could  only  be 
terminated  by  the  affirmative  act  of  the  defendants, 
which  act  had  not  been  performed.  The  plea 
was  therefore  held  bad. 

A  conspiracy  in  restraint  of  trade  [said  Mr.  Justice 
Holmes]  is  different  from  and  more  than  a  contract 
in  restraint  of  trade.  A  conspiracy  is  constituted  by 
an  agreement,  it  is  true,  but  it  is  the  result  of  the 
agreement,  rather  than  the  agreement  itself;  just  as 
a  partnership,  although  constituted  by  a  contract, 
is  not  the  contract,  but  is  a  result  of  it.  The  contract 
is  instantaneous;  the  partnership  may  endure  as 
one  and  the  same  partnership  for  years.  A  conspir- 
acy is  a  partnership  in  criminal  purposes.  That  as 
such  it  may  have  continuation  in  time  is  shown  by  the 
rule  that  an  overt  act  of  one  partner  may  be  the  act 
of  all  without  any  new  agreement  specifically  directed 
to  that  act.  .    .    . 

The  next  case  decided  was  that  of  Dr.  Miles 
Medical  Company  v.  John  D.  Park  &  Sons  Com- 
pany.1   That  was  a  suit  in  equity  brought  by  a 

1 220  U.  S.,  373. 


ii4  The  Changing  Order 

manufacturer  of  proprietary  medicines  prepared 
in  accordance  with  secret  formulae,  to  prevent 
dealings  in  them  by  third  parties  in  violation  of  a 
system  of  contracts  with  its  purchasers,  denomi- 
nated as  agents  (wholesale  distributing  agents  and 
retail  distributing  agents),  to  maintain  certain 
prices  fixed  by  it  for  all  sales  of  its  products  at 
wholesale  or  retail.  The  Court  held  that  the 
evidence  showed  that  complainant  had  created — 

a  system  of  interlocking  restrictions  by  which  the 
complainant  seeks  to  control  not  merely  the  prices 
at  which  its  agents  may  sell  its  products,  but  the 
prices  for  all  sales  by  all  dealers  at  wholesale  or  retail, 
whether  purchasers  or  sub-purchasers,  and  thus  to  fix 
the  amount  which  the  consumer  shall  pay,  eliminat- 
ing all  competition. 

The  Court  quoted  the  description  of  the  essential 
features  of  the  system  given  by  Mr.  Justice  Lurton 
in  his  opinion  in  the  Circuit  Court  of  Appeals,  as 
follows: 

The  contracting  wholesalers  or  jobbers  covenant 
that  they  will  sell  to  no  one  who  does  not  come  with 
complainant's  license  to  buy,  and  that  they  will  not 
sell  below  a  minimum  price  dictated  by  complainant. 
Next,  all  competition  between  retailers  is  destroyed, 
for  each  such  retailer  can  obtain  his  supply  only  by 
signing  one  of  the  uniform  contracts  prepared  for 
retailers,  whereby  he  covenants  not  to  sell  to  anyone 
who  proposes  to  sell  again  unless  the  buyer  is 
authorized  in  writing  by  the  complainant,  and  not  to 


Recent  Interpretation  of  Sherman  Act  115 

sell  at  less  than  a  standard  price  named  in  the  agree- 
ment. Thus  all  room  for  competition  between  re- 
tailers, who  supply  the  public,  is  made  impossible. 
If  these  contracts  leave  any  room  at  any  point  of  the 
line  for  the  usual  play  of  competition  between  the 
dealers  in  the  product  marketed  by  complainant,  it 
is  not  discoverable.  Thus  a  combination  between 
the  manufacturer,  the  wholesalers,  and  the  retailers 
to  maintain  prices  and  stifle  competition  has  been 
brought  about. 

That  these  agreements  restrained  trade  the 
Court  held  to  be  obvious.  That,  having  been 
made,  as  the  bill  alleged,  with  most  of  the  jobbers 
and  wholesale  druggists,  and  a  majority  of  the 
retail  druggists  of  the  country,  and  having  for  their 
purpose  the  control  of  the  entire  trade,  they  re- 
lated directly  to  interstate  as  well  as  intrastate 
trade,  and  operated  to  restrain  commerce  among 
the  several  States,  was  also  stated  to  be  clear. 
The  Court  analyzed  and  dismissed  the  contention 
that  the  restraints  were  valid  because  they  related 
to  proprietary  medicines  manufactured  under  a 
secret  process.  It  further  held  that  a  manu- 
facturer cannot  by  rule  and  notice,  in  the  absence 
of  contract  or  statutory  right,  even  though  the 
restriction  be  known  to  purchasers,  fix  prices  for 
future  sales.  Reference  was  made  in  this  regard 
to  the  decision  by  the  Supreme  Court  in  the  case 
of  Bobbs-Merrill  Co.  v.  Strauss1  that  no  such  privi- 
lege exists  under  the  copyright  statutes,  although 

*  210  u.  S.,  339. 


n6  The  Changing  Order 

the  owner  of  a  copyright  has  the  sole  right  to  vend 
copies  of  the  copyrighted  production,  and  it  was 
said  that  the  manufacturer  of  an  article  of  com- 
merce not  protected  by  any  statutory  grant  was 
not  in  any  better  case.  The  agreements  in  the 
case  at  bar  were  obviously  designed  to  maintain 
prices  after  the  complainant  had  parted  with  title 
to  the  articles,  and  to  prevent  competition  among 
those  who  traded  in  them,  and  for  that  reason  they 
were  held  to  be  void.  The  Court  cited  a  long  line 
of  cases  by  which  it  had  been  adjudged  that  agree- 
ments or  combinations  between  dealers,  having 
for  their  sole  purpose  the  destruction  of  compe- 
tition and  the  fixing  of  prices,  are  injurious  to  the 
public  interests  and  void. 

They  are  not  saved  by  the  advantages  which  the 
participants  expect  to  derive  from  the  enhanced 
price  to  the  consumer.  .  .  .  And  where  commodi- 
ties have  passed  into  the  channels  of  trade  and  are 
owned  by  dealers,  the  validity  of  agreements  to  pre- 
vent competition  and  to  maintain  prices  is  not  to  be 
determined  by  the  circumstance  whether  they  were 
produced  by  several  manufacturers  or  by  one,  or 
whether  they  were  previously  owned  by  one  or  by 
many.  The  complainant  having  sold  its  product  at 
prices  satisfactory  to  itself,  the  public  is  entitled 
to  whatever  advantage  may  be  derived  from  com- 
petition in  the  subsequent  traffic.1 

Following  these  two  cases,  the  Supreme  Court 
next  addressed  itself  to  the  decision  of  the  case 
•  220  U.  S.,  373,  408. 


Recent  Interpretation  of  Sherman  Act  1 1 7 

of  the  two  great  monopolistic  combinations — the 
Standard  Oil  and  the  American  Tobacco. 

In  the  Standard  Oil  case,  the  Supreme  Court 
affirmed  a  decree  of  the  Circuit  Court  which  ad- 
judged that  the  individual  and  corporate  defend- 
ants had  entered  into  and  were  carrying  out  a 
combination  or  conspiracy  in  restraint  of  inter- 
state and  foreign  commerce  in  petroleum  and  its 
products,  such  as  was  prohibited  by  the  first 
section  of  the  act;  and  that  by  means  of  this 
combination  those  defendants  had  combined  and 
conspired  to  monopolize,  had  monopolized,  and 
were  continuing  to  monopolize  a  substantial  part 
of  the  commerce  among  the  States,  in  the  Terri- 
tories, and  with  foreign  nations,  in  violation  of 
Section  2  of  the  act. 

This  conclusion  was  based  on  the  following  con- 
siderations, viz.: 

1.  Because  the  unification  of  power  and  control 
over  petroleum  and  its  products,  which  was  the  inev- 
itable result  of  the  combining  in  the  New  Jersey  cor- 
poration by  the  increase  of  its  stock  and  the  transfer 
to  it  of  the  stocks  of  so  many  other  corporations, 
aggregating  so  vast  a  capital,  gave  rise,  in  and  of  itself, 
in  the  absence  of  countervailing  circumstances,  to  say 
the  least,  to  the  prima  facie  presumption  of  intent  and 
purpose  to  maintain  the  dominancy  over  the  oil 
industry,  not  as  a  result  of  normal  methods  of  indus- 
trial development,  but  by  new  means  of  combination 
which  were  resorted  to  in  order  that  greater  power 
might  be  added  than  would  otherwise  have  arisen  had 


n8  The  Changing  Order 

normal  methods  been  followed;  the  whole  with  the 
purpose  of  excluding  others  from  the  trade  and  thus 
centralizing  in  the  combination  a  perpetual  control 
of  the  movements  of  petroleum  and  its  products  in 
the  channels  of  interstate  commerce. 

2.  Because  this  prima  facie  presumption  was 
made  conclusive  by  considering  the  conduct  of  the 
persons  and  corporations  who  were  mainly  instru- 
mental in  bringing  about  the  acquisition  by  the  New 
Jersey  corporation  of  the  stocks  of  the  large  number 
of  corporations  which  it  acquired,  as  well  as  the 
modes  in  which  the  power  vested  in  the  New  Jersey 
corporation  had  been  exerted  and  the  results  which 
had  arisen  from  it. 

The  acts  of  the  defendants  preceding  the  trans- 
fers to  the  New  Jersey  company  of  the  shares  of 
stock  of  a  large  number  of  other  corporations  were 
held  by  the  court  to  evidence 

an  intent  and  purpose  to  exclude  others  which  was 
frequently  manifested  by  acts  and  dealings  wholly 
inconsistent  with  the  theory  that  they  were  made  with 
the  single  conception  of  advancing  the  development  of 
business  power  by  usual  methods,  but  which  on  the 
contrary  necessarily  involved  the  intent  to  drive 
others  from  the  field  and  to  exclude  them  from  their 
right  to  trade  and  thus  accomplish  the  mastery  which 
was  the  end  in  view. 

Confirmation  of  the  finding  of  a  continuous 
intent  in  the  defendants  to  exclude  others  from  the 
field  and  themselves  to  dominate  it,  was  found  in 


Recent  Interpretation  of  Sherman  Act  119 

an  examination  of  the  exercise  of  its  power  by  the 
combination  after  it  was  formed. 

.  .  .  The  acquisition  here  and  there  which  en- 
sued of  every  efficient  means  by  which  competition 
could  have  been  asserted,  the  slow  but  resistless 
methods  which  followed  by  which  means  of  transpor- 
tation were  absorbed  and  brought  under  control,  the 
system  of  marketing  which  was  adopted  by  which  the 
country  was  divided  into  districts  and  trade  in  each 
district  in  oil  was  turned  over  to  a  designated  corpo- 
ration within  the  combination  and  all  others  were 
excluded,  all  lead  the  mind  up  to  a  conviction  of  a 
purpose  and  intent  which  we  think  is  so  certain  as 
practically  to  cause  the  subject  not  to  be  within  the 
domain  of  reasonable  contention. 

Briefly,  therefore,  the  decision  of  the  Court  was 
put  upon  the  ground  that  the  defendant,  by  vest- 
ing in  a  New  Jersey  corporation  the  stocks  of  a 
large  number  of  other  corporations  engaged  in 
various  branches  of  the  production,  refining, 
transportation,  and  marketing  of  petroleum  and 
its  products,  which  but  for  such  control  would  or 
might  have  been  engaged  in  competition  with  each 
other  in  interstate  and  foreign  commerce  in  those 
commodities,  had  acquired  the  control  of  that 
commerce;  and  that  such  control  was  acquired  and 
had  been  and  was  exercised  with  the  intent  and 
purpose  of  maintaining  it — not  as  a  result  of 
normal  methods  of  business,  but  by  new  means  of 
combination,  resorted  to  in  order  to  secure  greater 
power  than  would  have  been  acquired  by  normal 


120  The  Changing  Order 

methods,  and  of  driving  out  and  excluding,  so  far 
as  possible,  all  competitors  in  the  business,  thus 
centralizing  in  the  combination  a  perpetual  con- 
trol of  the  movements  of  petroleum  and  its  pro- 
ducts in  the  channels  of  interstate  commerce. 

It  was  not  alone  the  acquisition  of  a  large  share 
of  commerce  among  the  States  and  with  foreign 
countries,  upon  which  the  Court  predicated  the 
conclusion  of  unlawful  combination  and  monopoli- 
zation; but  the  attainment  of  dominion  over  a 
substantial  part  of  that  commerce  by  means  of 
intercorporate  stock  holdings  in  actually  or  po- 
tentially competing  corporations,  accompanied  by 
the  exclusion  of  competitors,  and  attended  with 
continued  acts  evidencing  an  intent  and  purpose 
to  retain  controlling  power  over  the  business,  and 
to  exclude  and  suppress  all  competition  with  it. 

In  reaching  the  conclusions  stated,  the  Chief 
Justice  reviewed  the  history  of  the  English  law  on 
the  subject  of  monopolies  and  restraints  of  trade, 
and  held  that  the  Sherman  Act  "was  drawn  in  the 
light  of  the  existing  practical  conception  of  the 
law  of  restraint  of  trade, "  and  that 

in  view  of  the  many  new  forms  of  contracts  and  com- 
binations which  were  being  evolved  from  existing 
economic  conditions,  it  was  deemed  essential  by  an 
all-embracing  enumeration  to  make  sure  that  no  form 
of  contract  or  combination  by  which  an  undue  re- 
straint of  interstate  or  foreign  commerce  was  brought 
about  could  save  such  restraint  from  condemnation. 
The  statute,  under  this  view,  evidenced  the  intent  not 


Recent  Interpretation  of  Sherman  Act  121 

to  restrain  the  right  to  make  and  enforce  contracts, 
whether  resulting  from  combination  or  otherwise, 
which  did  not  unduly  restrain  interstate  or  foreign 
commerce,  but  to  protect  that  commerce  from  being 
restrained  by  methods,  whether  old  or  new,  which 
would  constitute  an  interference  that  is  an  undue 
restraint. 

The  Chief  Justice  further  said  that  as  the  act 
had  not  defined  contracts  in  restraint  of  trade,  the 
standard  of  reason  which  had  been  applied  at  the 
common  law  and  in  this  country  in  dealing  with 
subjects  of  the  character  embraced  in  the  statute, 
was  intended  to  be  the  measure  used  for  determin- 
ing whether  in  a  given  case  a  particular  act  had  or 
had  not  brought  about  the  wrong  against  which 
the  statute  provided.  He  rejected  the  idea  that 
the  use  of  the  words  "every  contract,  etc.,  in 
restraint  of  trade"  in  the  statute,  leaves  no  room 
for  the  exercise  of  judgment,  but  simply  imposes 
the  plain  duty  of  applying  its  "prohibitions  to 
every  case  within  its  literal  language."  This, 
he  said,  would  be  to  make  the  statute  "destructive 
of  all  right  to  contract  or  agree  or  combine  in  any 
respect  whatever,  as  to  subjects  embraced  in 
interstate  trade  or  commerce."  He  cited  the 
language  of  Justice  Peckham  in  writing  the  opinion 
of  the  court  in  Hopkins  v.  United  States.  ■ 

To  treat  as  condemned  by  the  act  all  agreements 
under  which,  as  a  result,  the  cost  of  conducting  an 

"  171  U.  S.,  578,  592. 


122  The  Changing  Order 

interstate  commercial  business  may  be  increased  would 
enlarge  the  application  of  the  act  far  beyond  the  fair 
meaning  of  the  language  used.  There  must  be  some 
direct  and  immediate  effect  upon  interstate  commerce 
in  order  to  come  within  the  act. 

And  he  observed: 

If  the  criterion  by  which  it  is  to  be  determined  in 
all  cases  whether  every  contract,  combination,  etc., 
is  a  restraint  of  trade  within  the  intendment  of  the 
law,  is  the  direct  or  indirect  effect  of  the  acts  involved, 
then  of  course  the  rule  of  reason  becomes  the  guide 


A  consideration  of  the  text  of  the  second  section, 
he  said,  serves  to  establish  that  it  was  intended  to 
supplement  the  first,  and  to  make  sure  that  by  no 
possible  guise  could  the  public  policy  embodied 
in  the  first  section  be  frustrated  or  evaded. 

In  other  words,  having  by  the  first  section  forbidden 
all  means  of  monopolizing  trade — that  is,  unduly  re- 
straining it  by  means  of  every  contract,  combination, 
etc.,  the  second  section  seeks,  if  possible,  to  make  the 
prohibition  of  the  act  all  the  more  complete  and  per- 
fect by  embracing  all  attempts  to  reach  the  end  pro- 
hibited by  the  first  section — that  is,  restraints  of  trade, 
by  any  attempt  to  monopolize,  or  monopolization 
thereof,  even  although  the  acts  by  which  such  results 
are  attempted  to  be  brought  about  or  are  brought 
about  are  not  embraced  within  the  enumeration  of  the 
first  section.1 

1  Hopkins  v.  U.  S.,  171  U.  S.,  578,  592. 


Recent  Interpretation  of  Sherman  Act  123 

Mr.  Justice  Harlan,  in  a  separate  opinion,  while 
concurring  in  the  main  with  the  decision  of  the 
Court,  interpreted  the  majority  opinion  as  amount- 
ing to  a  reading  into  the  statute  of  the  word  "un- 
reasonable" before  the  words  "restraint  of  trade, " 
and  vigorously  protested  that  such  interpretation 
was  in  substance  the  reversing  of  the  previous 
deliberate  judgments  of  the  Court  to  the  effect 
"that  the  act  interpreting  its  words  in  their  or- 
dinary acceptation,  prohibits  all  restraints  of 
interstate  commerce  by  combinations  in  whatever 
form,  and  whether  reasonable  or  unreasonable." 

Two  weeks  after  the  decision  in  the  Standard  Oil 
case,  the  Court  rendered  its  decision  in  the  case 
against  the  Tobacco  combination.  In  his  opinion, 
which  was  concurred  in  by  all  the  associate  justices 
but  Harlan,  the  Chief  Justice  interpreted  the 
opinion  in  the  former  case  and  answered  the  criti- 
cisms of  Mr.  Justice  Harlan  and  those  who  had 
expressed  views  similar  to  his  as  to  the  meaning  of 
the  Standard  Oil  decision. 

In  that  case  [said  the  Chief  Justice],  it  was  held, 
without  departing  from  any  previous  decision  of  the 
Court,  that  as  the  statute  had  not  defined  the  words 
"restraint  of  trade"  it  became  necessary  to  construe 
those  words,  a  duty  which  could  be  discharged  only 
by  a  resort  to  reason. 

He  quoted  the  language  of  Justice  Peckham  in 
the  Joint  Traffic  case. x 

"  171  U.  S.,  568. 


124  The  Changing  Order 

The  act  of  Congress  must  have  a  reasonable  con- 
struction, or  else  there  would  scarcely  be  an  agreement 
or  contract  among  business  men  that  could  not  be 
said  to  have,  indirectly  or  remotely,  some  bearing 
upon  interstate  commerce,  and  possibly  to  restrain  it. 

"Applying/'  said  the  Chief  Justice, 

the  rule  of  reason  to  the  construction  of  the  statute,  it 
was  held  in  the  Standard  Oil  case  that  as  the  words 
restraint  of  trade  at  common  law  and  in  the  law  of  this 
country  at  the  time  of  the  adoption  of  the  Anti-trust 
Act  only  embraced  acts  or  contracts  or  agreements 
or  combinations  which  operated  to  the  prejudice  of 
the  public  interests  by  unduly  restricting  competition 
or  unduly  obstructing  the  due  course  of  trade,  or  which, 
either  because  of  their  inherent  nature  or  effect,  or 
because  of  the  evident  purpose  of  the  acts,  etc., 
injuriously  restrained  trade,  that  the  words  as  used  in 
the  statute  were  designed  to  have  and  did  have  but  a 
like  significance.  It  was  therefore  pointed  out  that 
the  statute  did  not  forbid  or  restrain  the  power  to 
make  normal  and  usual  contracts  to  further  trade  by 
resorting  to  all  normal  methods,  whether  by  agree- 
ment or  otherwise,  to  accomplish  such  purpose.  In 
other  words,  it  was  held,  not  that  acts  which  the  statute 
prohibited  could  be  removed  from  the  control  of  its 
prohibitions  by  a  finding  that  they  were  unreasonable, 
but  that  the  duty  to  interpret,  which  inevitably  arose 
from  the  general  character  of  the  term  restraint  of 
trade,  required  that  the  words  restraint  of  trade  should 
be  given  a  meaning  which  would  not  destroy  the 
individual  right  to  contract  and  render  difficult  if  not 
impossible  any  movement  of  trade  in  the  channels  of 


Recent  Interpretation  of  Sherman  Act  125 

interstate  commerce — the  free  movement  of  which  it 
was  the  purpose  of  the  statute  to  protect.1 

The  facts  presented  in  the  Tobacco  case  were 
more  intricate  and  involved  than  those  in  the 
Standard  Oil  case.  Not  only  was  the  American 
Tobacco  Company  the  holder  of  stocks  in  other 
companies,  but  it  was  itself  a  consolidated  com- 
pany formed  by  the  merger,  under  the  laws  of 
New  Jersey,  of  three  pre-existing  companies.  The 
combination  of  many  previously  competing  com- 
panies, was  created,  first  by  the  transfer  of  shares 
of  stock  from  one  to  the  other,  afterwards  cemented 
by  absolute  conveyances  of  land,  plants,  and  other 
property  and  business.  The  nucleus  of  the  com- 
bination was  the  original  American  Tobacco 
Company,  organized  in  January,  1890,  and  to 
which  were  at  once  conveyed  by  deed  and  transfer 
the  plants  and  business  of  five  different  concerns, 
competitors  in  the  purchase  of  the  raw  product 
which  they  manufactured,  and  in  the  distribution 
and  sale  of  the  manufactured  products.  The 
result  of  this  combination  was  to  give  to  the  new 
company  immediately  on  its  organization  a  prac- 
tical monopoly  of  the  cigarette  business  of  the 
United  States,  and  that  accomplishment  colored 
all  subsequent  proceedings  in  the  widening  sweep 
of  the  combination,  the  progress  of  which  was 
noted  by  the  Supreme  Court  as  being  attended 
with  the  constant  acquisition  of  competing  con- 

1  U.  S.  v.  American  Tobacco  Co.,  et  al. 


126  The  Changing  Order 

cerns,  buttressed  by  covenants  on  the  part  of  all 
their  officers  and  principal  stockholders  not  to 
engage  in  business  in  competition  with  the  pur- 
chaser ;  and  in  the  acquisition  of  many  competitors, 
not  for  the  purpose  of  continuing  their  operation, 
but  of  closing  them  down  and  putting  them 
permanently  out  of  business.  A  summary  of  the 
salient  facts  dwelt  on  by  the  Court  as  the  basis  for 
its  decision  was  made  in  this  language : 

Thus,  it  is  beyond  dispute:  First,  that  since  the 
organization  of  the  new  American  Tobacco  Company 
that  company  has  acquired  four  large  tobacco  concerns, 
that  restrictive  covenants  against  engaging  in  the 
tobacco  business  were  taken  from  the  sellers,  and  that 
the  plants  were  not  continued  in  operation  but  were  at 
once  abandoned.  Second,  that  the  new  company 
has  besides  acquired  control  of  eight  additional 
concerns,  the  business  of  such  concerns  being  now 
carried  on  by  four  separate  corporations,  all  absolutely 
controlled  by  the  American  Tobacco  Company, 
although  the  connection  as  to  two  of  these  companies 
with  that  corporation  was  long  and  persistently  denied. 

Thus  reaching  the  end  of  the  second  period  and 
coming  to  the  time  of  the  bringing  of  the  suit,  brevity 
prevents  us  from  stopping  to  portray  the  difference 
between  the  condition  in  1890  when  the  (old)  Ameri- 
can Tobacco  Company  was  organized  by  the  con- 
solidation of  five  competing  cigarette  concerns  and 
that  which  existed  at  the  commencement  of  the  suit. 
That  situation  and  the  vast  power  which  the  principal 
and  accessory  corporate  defendants  and  the  small 
number  of  individuals  who  own  a  majority  of  the 


Recent  Interpretation  of  Sherman  Act  127 

common  stock  of  the  new  American  Tobacco  Company 
exert  over  the  marketing  of  tobacco  as  a  raw  product, 
its  manufacture,  its  marketing  when  manufactured, 
and  its  consequent  movement  in  the  channels  of 
interstate  commerce,  indeed,  relatively,  over  foreign 
commerce,  and  the  commerce  of  the  whole  world, 
in  the  raw  and  manufactured  products,  stand  out  in 
such  bold  relief  from  the  undisputed  facts  which 
have  been  stated.   .    .    . z 

These  undisputed  facts,  the  Court  said,  in- 
volved questions  as  to  the  operation  of  the  anti- 
trust law  not  theretofore  presented  in  any  case. 
They  clearly  demonstrated  that  the  acts,  con- 
tracts, agreements,  combinations,  etc.,  which  were 
assailed  were  of  such  an  unusual  and  wrongful 
character  as  to  bring  them  within  the  prohibitions 
of  the  law. 

Indeed  [said  the  Chief  Justice]  the  history  of  the 
combination  is  so  replete  with  the  doing  of  acts  which 
it  was  the  obvious  purpose  of  the  statute  to  forbid, 
so  demonstrative  of  the  existence  from  the  beginning 
of  a  purpose  to  acquire  dominion  and  control  of  the 
tobacco  trade,  not  by  the  mere  exertion  of  the  ordinary 
right  to  contract  and  to  trade,  but  by  methods  devised 
in  order  to  monopolize  the  trade  by  driving  competi- 
tors out  of  business,  which  were  ruthlessly  carried 
out  upon  the  assumption  that  to  work  upon  the  fears 
or  play  upon  the  cupidity  of  competitors  would  make 
success  possible.2 

*  U.  S.  t>.  American  Tobacco  Co.,  et  al.  *  Ibid. 


128  The  Changing  Order 

These  conclusions  were  stated  to  be  inevitable, 
not  because  of  the  vast  amount  of  property  aggre- 
gated by  the  combination,  not  because  alone  of  the 
many  corporations  which  the  proof  showed  were 
united  by  resort  to  one  device  or  another,  not  alone 
because  of  the  dominion  and  control  over  the 
tobacco  trade  which  actually  existed,  but  because 
the  Court  was  of  opinion  that  the  conclusion  of 
wrongful  purpose  and  illegal  combination  was 
overwhelmingly  established  by  the  following  con- 
siderations: 

1.  The  fact  that  the  first  organization  or  com- 
bination was  impelled  by  a  previously  existing 
fierce  trade  war,  evidently  inspired  by  one  or  more 
of  the  minds  which  brought  about  and  became 
parties  to  the  combination. 

2.  Because,  immediately  after  that  combina- 
tion, the  acts  which  ensued  justified  the  inference 
that  the  intention  existed  to  use  the  power  of 
the  combination  as  a  vantage  ground  to  further 
monopolize  the  trade  in  tobacco  by  means  of  trade 
conflicts  designed  to  injure,  either  by  driving  com- 
petitors out  of  the  business  or  compelling  them  to 
become  parties  to  the  combination. 

3.  By  the  ever-present  manifestation  of  a 
conscious  wrong-doing  by  the  form  in  which  the 
various  transactions  were  embodied  from  the 
beginning — now  the  organization  of  a  new  com- 
pany, now  the  control  exerted  through  taking  up 
stock  in  one  or  another  or  in  several,  so  as  to 
obscure  the  result  actually  attained,  evidencing 


Recent  Interpretation  of  Sherman  Act  129 

a  constant  purpose  to  restrain  others  and  to 
monopolize  and  retain  power  in  the  hands  of  the 
few  who,  from  the  beginning,  contemplated  the 
mastery  of  the  trade  which  followed. 

4.  By  the  absorption  of  control  of  all  the  ele- 
ments essential  to  the  manufacture  of  tobacco  and 
its  products,  and  placing  such  control  in  the  hands 
of  seemingly  independent  corporations  serving  as 
perpetual  barriers  against  others  in  the  trade. 

5.  By  persistent  expenditure  of  large  sums  in 
buying  out  plants,  not  to  utilize  but  to  close 
up,  rendering  them  useless  for  the  purposes  of 
trade. 

6.  By  the  constantly  recurring  stipulations 
exacted  from  manufacturers,  stockholders,  or 
employees,  binding  themselves  generally  for  long 
periods  not  to  compete  in  the  future. 

From  all  of  these  acts,  the  Court  deduced  the 
conclusion  that  the  defendants  had  been  engaged 
in  a  largely  successful  effort,  extending  over  a 
period  of  years,  to  monopolize  (that  is,  wrongfully 
to  acquire  to  themselves)  the  dominion  over  the 
manufacture  and  marketing  of  tobacco  and  its 
products  and  accessories,  not  by  normal  methods 
of  business,  but  by  unfair  and  subtle  methods  of 
combination,  resorted  to  in  order  to  secure  greater 
power  than  they  could  have  acquired  by  normal 
methods  of  business,  and  with  the  intention  of 
driving  out  and  excluding  so  far  as  possible  all 
other  competitors,  and  centralizing  in  the  com- 
bination a  perpetual  control  of  the  movements  of 


130  The  Changing  Order 

tobacco  and  its  products  and  accessories  in  the 
channels  of  interstate  and  foreign  commerce. 

The  remedy  to  be  applied  in  the  Standard  Oil 
case  was  comparatively  simple  and  obvious,  and 
the  decree  of  the  Circuit  Court  which,  with  slight 
modifications,  was  affirmed  by  the  Supreme  Court, 
to  use  the  language  of  that  court, 

commanded  the  dissolution  of  the  combination,  and 
therefore,  in  effect,  directed  the  transfer  by  the  New 
Jersey  corporation  back  to  the  stockholders  of  the 
various  subsidiary  corporations  entitled  to  the  same, 
of  the  stock  which  had  been  turned  over  to  the  New 
Jersey  corporation  in  exchange  for  its  stock,  and  en- 
joined the  stockholders  of  the  corporations  after  the 
dissolution  of  the  combination  from,  by  any  device 
whatever,  recreating  directly  or  indirectly  the  illegal 
combination  which  the  decree  dissolved. 

A  far  more  intricate  problem  was  presented  in 
the  Tobacco  case,  as  was  frankly  recognized  by  the 
Court.  Conveyances,  consolidations,  and  mergers, 
and  the  dissolution  of  previously  existing  cor- 
porations whose  stocks  and  properties  had  been 
acquired,  had  so  blended  the  whole  combination 
into  new  form,  as  to  make  it  impossible  to  effect  a 
dissolution  by  the  simple  method  applicable  to 
the  Standard  Oil  case,  and  therefore  the  Supreme 
Court  said  that,  in  determining  the  relief  proper 
to  be  given,  it  might  not  model  its  action  upon  that 
granted  by  the  Court  below,  but  in  order  to  award 
relief  coterminous  with  the  ultimate  redress  of  the 


Recent  Interpretation  of  Sherman  Act  131 

wrongs  which  the  Court  found  to  exist,  it  must 
approach  the  subject  of  relief  from  an  original 
point  of  view.  In  considering  the  subject  from 
that  aspect,  the  Court  said  that  three  dominant 
influences  must  guide  its  action: 

(1)  The  duty  of  giving  complete  and  efficacious 
effect  to  the  prohibitions  of  the  statute;  (2)  the  accom- 
plishment of  this  result  with  as  little  injury  as  possible 
to  the  interest  of  the  general  public;  and  (3)  a  proper 
regard  for  the  vast  interests  of  private  property  which 
may  have  become  vested  in  many  persons  .  .  . 
without  any  guilty  knowledge  or  intent  in  any  way 
to  become  actors  or  participants  in  the  wrongs  which 
we  find  to  have  inspired  and  dominated  the  combina- 
tion from  the  beginning. 

For  the  purpose  of  meeting  that  situation,  the 
Court  declared  that  it  might  at  once  resort  to  one 
or  the  other  of  two  general  remedies : 

(a)  The  allowance  of  a  permanent  injunction  re- 
straining the  combination  as  a  universality  and  the  in- 
dividuals and  corporations  which  form  a  part  of  or 
co-operate  in  it  in  any  manner  or  form  from  continuing 
to  engage  in  interstate  commerce  until  the  illegal 
situation  be  cured  .  .  .  ;  or  (b)  to  direct  the  appoint- 
ment of  a  receiver  to  take  charge  of  the  assets  and 
property  in  this  country  of  the  combination  in  all  its 
ramifications  for  the  purpose  of  preventing  a  continued 
violation  of  the  law,  and  thus  working  out  by  a  sale 
of  the  property  of  the  combination  or  otherwise,  a 
condition  of  things  which  would  not  be  repugnant  to 
the  prohibitions  of  the  act, 


132  The  Changing  Order 

The  Court,  however,  in  consideration  of  the 
public  interests  and  that  of  innocent  participants, 
determined  to  send  the  case  back  to  the  Circuit 
Court,  with  directions  to  endeavor  to  ascertain  and 
determine  upon  some  plan  or  method  of  dissolving 
the  combination  and  working  out  a  lawful  con- 
dition of  things,  if  that  could  be  done  within  a 
period  of  six  months,  with  a  possible  extension  of 
two  months  longer;  but  that  in  the  event  that 
such  condition  of  disintegration  in  conformity  with 
the  law  should  not  be  brought  about  within  that 
time,  it  should  be  the  duty  of  the  Circuit  Court, 

either  by  way  of  an  injunction  restraining  the  move- 
ment of  the  products  of  the  combination  in  the  chan- 
nels of  interstate  or  foreign  commerce,  or  by  the 
appointment  of  a  receiver,  to  give  effect  to  the  require- 
ments of  the  statute. 

Probably  no  more  drastic  decree  has  ever  been 
entered  by  the  Supreme  Court  than  this.  The 
Court  remits  to  the  Circuit  Court  the  execution  of 
a  decree  of  dissolution  of  a  combination  of  sixty- 
seven  corporations  and  twenty-nine  individuals, 
with  assets  amounting  to  upwards  of  $400,000,000 
book  value,  and  net  earnings  exceeding  $36,000,000 
per  annum;  which  had  acquired  77  per  cent,  of  the 
entire  business  of  the  United  States  in  manufac- 
tured tobacco,  plug  and  smoking  tobacco;  96  per 
cent,  of  snuff ;  77  per  cent,  of  cigarettes;  91  per  cent, 
of  little  cigars ;  and  14  per  cent,  of  cigars  and  stogies ; 
and  which  has  acquired  probably  the  most  exten- 


Recent  Interpretation  of  Sherman  Act  133 

sive  monopoly  of  interstate  and  foreign  commerce 
ever  created  in  the  world.  This  combination  was 
ordered  to  be  resolved  into,  not  necessarily  its 
original  elements,  but,  in  effect,  to  be  divided  up 
into  a  number  of  separate  and  distinct  integers,  no 
one  of  which  should  threaten  monopoly,  and  which 
should  not  either  by  reason  of  their  organization 
and  business,  or  in  their  relation  to  each  other, 
constitute  combinations  in  restraint  of  interstate 
or  foreign  commerce.  The  Supreme  Court  not 
only  empowered,  but  directed  the  Circuit  Court,  in 
case  this  lawful  condition  should  not  be  brought 
about  within  a  period  of  six  or  eight  months, 
to  either  appoint  a  receiver  of  this  vast  property 
for  the  purpose  of,  by  sale  or  otherwise,  working 
out  the  ordered  disintegration;  or  by  injunction 
to  paralyze  and  end  its  conduct  of  interstate  busi- 
ness. Those  who  have  thoughtlessly  yielded  to 
the  superficial  conclusion  resulting  from  the  appli- 
cation by  the  Chief  Justice  of  the  rule  of  reason  to 
the  interpretation  of  the  Sherman  Law,  can  find  but 
little  to  justify  the  idea  that  the  Sherman  Law  has 
been  rendered  ineffective  by  those  two  decisions, 
for  precisely  the  contrary  is  clearly  established  by 
these  great  judgments.  The  most  cursory  exami- 
nation of  the  decree  in  the  Tobacco  case, — the 
most  casual  consideration  of  the  drastic  and  far- 
reaching  remedy  imposed,  makes  it  perfectly 
apparent  that  the  Sherman  Law,  perhaps  for  the 
first  time,  has  been  demonstrated  to  be  an  actual, 
effective  weapon  to  the  accomplishment  of  the 


134  The  Changing  Order 

purpose  for  which  it  was  primarily  enacted,  namely, 
the  destruction  of  the  great  combinations  famil- 
iarly known  as  "trusts." 

The  main  reliance  of  the  defendants  in  both  the 
Standard  Oil  and  the  Tobacco  cases  was  the  de- 
cision in  United  States  v.  Knight *  to  the  effect  that 
the  acquisition  of  a  number  of  manufacturing 
plants  in  one  State  by  a  corporation  of  another 
State  was  not  within  the  intent  of  the  Sherman 
law,  even  though  the  purchaser  thereby  acquired 
upward  of  90  per  cent,  of  all  the  refineries  of  sugar 
in  the  United  States,  because  manufacture  alone 
and  not  commerce,  was  involved.  The  Knight 
case  had  been  distinguished  in  subsequent  cases 
as  not  involving  any  questions  of  interstate  com- 
merce. In  the  Standard  Oil  case  the  Court  dis- 
missed it  with  scant  consideration,  saying: 

The  view,  however,  which  the  argument  takes  of 
that  case  and  the  arguments  based  upon  that  view 
have  been  so  repeatedly  pressed  upon  this  Court  in 
connection  with  the  interpretation  and  enforcement 
of  the  Anti-trust  Act,  and  have  been  so  necessarily 
and  expressly  decided  to  be  unsound  as  to  cause  the 
contentions  to  be  plainly  foreclosed  and  to  require  no 
express  notice.2 

1 156  U.  S.,  1. 

2  The  Court  cited  as  illustrative  of  this  point  the  cases  of  United 
States  v.  Northern  Securities  Co.,  3  Loewe  v.  La wler,  *  United  States 
v.  Swift  &  Co., s  Montague  v.  Lowry,6  Shawnee  Compress  Co. 
v.  Anderson.  7 

3 193  U.  S.,  334-  42o8U.  S.,  274.  s  196  U.  S.,  375 

6 193  U.  S.,  38.  1 209  U.  S.,  423. 


Recent  Interpretation  of  Sherman  Act   135 

But  the  decision  in  the  case  of  West,  Attorney- 
General,  v.  Kansas  Natural  Gas  Company,  ren- 
dered May  15,  191 1,  goes  further  in  overthrowing 
the  doctrine  of  the  Knight  case  than  any  of  those 
cited  by  the  Chief  Justice  in  the  Standard  Oil  case, 
or  than  the  obvious  disregard  of  its  authority  in  the 
latter  case.  In  the  Knight  case,  the  facts  presented 
in  the  evidence  were  taken  by  the  Court  as  involving 
merely  the  acquisition  by  one  corporation  of  manu- 
factories wholly  within  the  State,  and  it  was  held 
that  such  acquisition  was  not  within  the  power  of 
the  Congress  of  the  United  States  to  regulate  com- 
merce among  the  States  and  with  foreign  countries. 

Doubtless  [said  Chief  Justice  Fuller]  the  power  to 
control  the  manufacture  of  a  given  thing  involves  in  a 
certain  sense  the  control  of  its  disposition,  but  this  is 
a  secondary  and  not  a  primary  sense.  .  .  .  Com- 
merce succeeds  to  manufacture  and  is  not  a  part  of 
it.  .  .  .  The  regulation  of  commerce  applies 
to  the  subject  of  commerce  and  not  to  matters  of 
internal  police.  Contracts  to  buy,  sell,  or  exchange 
goods  to  be  transported  among  the  several  States,  the 
transportation  and  its  instrumentalities  and  articles 
bought,  sold,  or  exchanged  for  the  purpose  of  such 
transit  among  the  States,  or  put  in  the  way  of  transit, 
may  be  regulated,  but  this  is  because  they  form  part  of 
interstate  trade  or  commerce.  The  fact  that  an  article 
is  manufactured  for  export  to  another  State  does  not 
of  itself  make  it  an  article  of  interstate  commerce, 
and  the  intent  of  the  manufacturer  does  not  determine 
the  time  when  the  article  or  product  passes  from  the 
control  of  the  State  and  belongs  to  commerce. 


136  The  Changing  Order 

The  cases  of  Coe  v.  Enrol1  and  Kidd  v.  Pearson2 
were  cited  in  support  of  the  proposition  that  func- 
tions of  manufacture  and  commerce  were  different, 
that  to  hold  otherwise  would  be  to  invest  Congress, 
"to  the  exclusion  of  States,  with  the  power  to 
regulate,  not  only  manufactures,  but  also  agricul- 
ture, horticulture,  stock  raising,  domestic  fisheries, 
mining — in  short,  every  branch  of  human  industry.' ' 
That  contracts,  combinations,  or  conspiracies  to 
control  domestic  enterprises  in  manufactures,  agri- 
culture, mining,  production  in  all  its  forms,  or  to 
raise  or  lower  prices  or  wages,  might  unquestion- 
ably tend  to  restrain  external  as  well  as  domestic 
trade,  the  Court  conceded;  but  it  said  that  such 
restraint  would  be  an  indirect  result,  however 
inevitable  and  whatever  its  extent,  and  such  result 
would  not  necessarily  determine  the  object  of  the 
contract,  combination,  or  conspiracy.  So  it  was 
held  in  Kidd  v.  Pearson  that  the  refusal  of  a  State 
to  allow  articles  to  be  manufactured  within  her 
borders,  even  for  export,  did  not  directly  affect 
external  commerce  and  did  not  trench  upon  the 
Congressional  control  over  interstate  commerce. 

In  the  West  case,  the  Supreme  Court  reviewed 
decisions  of  the  U.  S.  Circuit  Court  in  suits  having 
for  their  common  purpose  an  attack  upon  the 
constitutional  validity  of  a  statute  of  Oklahoma, 
framed  for  the  purpose  of  prohibiting  the  trans- 
portation or  transmission  of  natural  gas  from  points 
within  that  State  to  points  in  other  States.     This 

1116U.  S.,  517.  »I28U.  S.,  1. 


Recent  Interpretation  of  Sherman  Act  137 

prohibition  was  sought  to  be  accomplished  by  var- 
ious provisions  in  the  statute  under  review.  The 
statute  was  held  to  be  prohibitive  of  interstate 
commerce  in  natural  gas,  and,  consequently,  a 
violation  of  the  commerce  clause  of  the  Constitu- 
tion of  the  United  States.  Mr.  Justice  McKenna, 
writing  the  opinion  of  the  Court,  said  that  the 
act  presented  no  embarrassing  questions  of  inter- 
pretation: 

It  was  manifestly  enacted  in  the  confident  belief  that 
the  State  has  the  power  to  confine  commerce  in  natural 
gas  between  points  within  the  State ....  And  the 
State  having  such  power,  it  is  contended,  if  its  exercise 
affects  interstate  commerce  it  affects  such  commerce 
only  incidentally — in  other  words,  affects  it  only,  as 
it  is  contended,  by  the  exertion  of  lawful  rights 
and  only  because  it  cannot  acquire  the  means  for  its 
exercise. 

The  results  of  the  contention,  the  Court  held, 
repel  its  acceptance. 

Gas,  when  reduced  to  possession,  is  a  commodity; 
it  belongs  to  the  owner  of  the  land,  and,  when  reduced 
to  possession,  is  his  individual  property  subject  to  sale 
by  him,  and  may  be  a  subject  of  intrastate  commerce 
and  interstate  commerce.  The  statute  of  Oklahoma 
recognizes  it  to  be  a  subject  of  intrastate  commerce, 
but  seeks  to  prohibit  it  from  being  the  subject  of 
interstate  commerce,  and  this  is  the  purpose  of  its 
conservation.  In  other  words,  the  purpose  of  its 
conservation  is  in  a  sense  commercial — the  business 


138  The  Changing  Order 

welfare  of  the  State,  as  coal  might  be,  or  timber.  Both 
of  those  products  may  be  limited  in  amount,  and  the 
same  consideration  of  the  public  welfare  which  would 
confine  gas  to  the  use  of  the  inhabitants  of  a  State 
would  confine  them  to  the  inhabitants  of  the  State. 
If  the  States  have  such  power  a  singular  situation  might 
result.  Pennsylvania  might  keep  its  coal,  the  North- 
west its  timber,  the  mining  States  their  minerals. 
And  why  may  not  the  products  of  the  field  be  brought 
within  the  principle?  Thus  enlarged,  or  without  that 
enlargement,  its  influence  on  interstate  commerce  need 
not  be  pointed  out.  To  what  consequences  does  such 
power  tend?  If  one  State  has  it,  all  States  have  it; 
embargo  may  be  retaliated  by  embargo,  and  commerce 
will  be  halted  at  State  lines.  And  yet  we  have  said 
that  "in  matters  of  foreign  and  interstate  commerce 
there  are  no  State  lines. "  In  such  commerce,  instead 
of  the  States,  a  new  power  appears  and  a  new  welfare, 
a  welfare  which  transcends  that  of  any  State.  But 
rather  let  us  say  it  is  constituted  of  the  welfare  of  all 
of  the  States  and  that  of  each  State  is  made  the 
greater  by  a  division  of  its  resources,  natural  and 
created,  with  every  other  State,  and  those  of  every 
other  State  with  it.  This  was  the  purpose,  as  it  is  the 
result,  of  the  interstate  commerce  clause  of  the  Con- 
stitution of  the  United  States.  If  there  is  to  be  a 
turning  backward  it  must  be  done  by  the  authority 
of  another  instrumentality  than  a  court.  ...  At 
this  late  day  it  is  not  necessary  to  cite  cases  to 
show  that  the  right  to  engage  in  interstate  commerce 
is  not  the  gift  of  a  State,  and  that  it  cannot  be  regu- 
lated or  restrained  by  a  State,  or  that  a  State  cannot 
exclude  from  its  limits  a  corporation  engaged  in  such 
commerce. 


Recent  Interpretation  of  Sherman  Act  139 

If,  therefore,  the  State  cannot  control  the  trans- 
mission of  natural  gas  produced  within  its  borders 
to  other  States,  because  to  concede  that  control 
would  be  in  effect  to  empower  it  to  cut  off  at  its 
source  all  of  the  objects  of  interstate  commerce, 
how  can  it  retain  the  right  to  prohibit  the  manu- 
facture within  its  limits  of  commodities  intended 
to  be  shipped  in  interstate  commerce?  Com- 
modities when  so  manufactured  are  precisely  like 
natural  gas  reduced  to  the  possession  of  the  owner — 
that  is,  a  commodity  which  belongs  to  him  as  his 
individual  property,  is  subject  to  sale  by  him,  and 
may  be  the  subject  of  interstate  and  intrastate 
commerce.  It  is  true  the  statute  did  not  deal 
with  the  production  of  the  gas,  and  to  that  extent, 
possibly,  it  is  not  in  conflict  with  Kidd  v.  Pearson 
and  Coe  v.  Errol.  Yet  if  the  constitutional  right 
of  Congress  to  regulate  interstate  commerce 
attaches  to  the  commodity  the  moment  it  is  in 
existence  in  the  hands  of  the  owner,  so  that  the 
State  may  not  prohibit  its  shipment  in  interstate 
commerce,  does  it  not  apply  as  well  from  that 
moment  to  prevent  the  owner  from  himself,  by 
combination  or  agreement,  imposing  an  undue 
restraint  upon  its  shipment  in  such  commerce. 
What  the  State  is  prohibited  from  doing,  the 
citizen  may  not  do,  and  the  Sherman  Act  attaches 
from  the  moment  the  commodity  comes  into 
existence  to  prevent  any  impediment  being  laid 
upon  its  possible  passage  into  the  ordinary  and 
usual  currents  of  commerce  among  the  States. 


140  The  Changing  Order 

Summing  up  the  results  of  these  late  decisions, 
therefore,  it  will  be  seen  that  the  area  of  uncer- 
tainty in  the  law  has  been  greatly  narrowed,  and 
that  its  scope  and  effect  have  been  pretty  clearly 
defined;  the  school  of  literal  interpretation  has 
been  repudiated,  and  the  application  of  a  rule  of 
reasonable  construction  declared.  There  will  be 
always,  of  course,  a  field  of  uncertainty  in  so  far 
as  an  investigation  of  facts — particularly  when 
intent  becomes  a  necessary  consideration — is 
required.  But  this  much  may  surely  be  said  to 
be  now  beyond  controversy : 

That  ordinary  agreements  of  purchase  and  sale,  of 
partnership,  or  of  corporate  organization,  do  not  vio- 
late the  first  section  of  the  Sherman  Act ,  even  though 
incidentally  and  to  a  limited  degree  they  may  oper- 
ate to  restrain  competition  in  interstate  or  foreign 
commerce  between  the  parties  to  such  agreements. 

But  any  contract,  combination,  or  association, 
the  direct  object  and  effect  of  which  is  to  control 
prices,  restrict  output,  divide  territory,  refrain 
from  competition  or  exclude  or  prevent  others  from 
competing  in  any  particular  field  of  enterprise, 
imposes  an  undue  restraint  upon  trade  and  com- 
merce and  is  in  violation  of  the  first  section  of  the 
act.  This  principle  applies  to  all  associations  of 
competitors  of  the  character  usually  known  as 
pools;  to  agreements  with  so-called  wholesale  or 
retail  agents,  whereby  the  manufacturer  of  an 
article,  even  though  made  according  to  some  secret 
process  or  formula,  seeks  to  control  the  price  at 


Recent  Interpretation  of  Sherman  Act  141 

which  it  may  be  sold  by  purchasers  directly  or 
indirectly  from  the  manufacturer.  It  applies  also 
to  attempts  to  control  competition  between  in- 
dependent concerns  by  means  of  a  stock-holding 
trust,  whether  individual  or  corporation  holder. 

Size  alone  does  not  constitute  monopoly.  The 
attainment  of  a  dominant  position  in  a  business, 
acquired  as  the  result  of  honest  enterprise  and 
normal  methods  of  business  development,  is  not  a 
violation  of  the  law.  But  unfair  methods  of  trade, 
by  destroying  and  excluding  competitors  by  means 
of  intercorporate  stockholdings,  or  by  means 
of  agreements  between  actual  or  potential  com- 
petitors, whereby  the  control  of  commerce  among 
the  States  or  with  foreign  countries  in  any  par- 
ticular line  of  industry  is  secured  or  threatened, 
expose  those  who  are  concerned  in  such  efforts  to 
the  penalties  prescribed  in  the  second  section  of 
the  act,  because  they  are  engaged  in  monopolizing 
or  attempting  to  monopolize  such  commerce. 

It  is  also  now  settled  that  no  form  of  corporate 
organization,  merger,  or  consolidation — no  species 
of  transfer  of  title,  whether  by  sale,  conveyance,  or 
mortgage;  and  no  lapse  of  time  from  the  date  of 
the  original  contract,  conspiracy,  or  combination, 
can  bar  a  Federal  Court  of  equity  from  terminat- 
ing an  unlawful  restraint,  or  compelling  the  dis- 
integration of  a  monopolistic  combination.  The 
maxim  nullum  tempus  occur rit  regi  is  applicable  to 
any  continuing  combination  or  conspiracy  which 
the  Anti-Trust  Act  of  1890  condemns. 


142  The  Changing  Order 

Speaking  of  the  conscious  development  of  insti- 
tutions in  America,  Woodrow  Wilson  in  his  work 
on  "The  State,"  writes: 

It  is  one  of  the  distinguishing  characteristics  of  the 
English  race,  whose  political  habit  has  been  trans- 
mitted to  us  through  the  sagacious  generation  by  whom 
this  government  was  erected,  that  they  have  never 
felt  themselves  bound  by  the  logic  of  laws,  but  only  by 
a  practical  understanding  of  them  based  upon  slow 
precedent.  For  this  race,  the  law  under  which  they 
live  is  at  any  particular  time  what  it  is  then  understood 
to  be,  and  this  understanding  of  it  is  compounded 
of  the  circumstances  of  the  time.  Absolute  theories 
of  legal  consequence  they  have  never  cared  to  follow 
out  to  their  conclusions.  Their  laws  have  always 
been  used  as  parts  of  the  practical  running  machinery 
of  their  politics — parts  to  be  fitted  from  time  to 
time,  by  interpretation,  to  existing  opinion  and  social 
condition. 

If  this  law,  designed  to  protect  the  people  of  this 
country  from  the  evils  of  monopoly,  and  to  pre- 
serve the  liberty  of  the  individual  to  trade  freely, 
shall  now  be  clearly  understood ;  if  its  true  purpose 
shall  be  recognized  and  its  beneficent  consequences 
realized;  the  twenty  years  of  slowly  developed 
interpretation  and  widening  precedent  will  not 
have  been  without  great  value.  For  the  law  will 
henceforth  be  used,  to  employ  Dr.  Wilson's 
language,  as  a  part  of  the  running  machinery  of 
our  political  system,  adapted  to  the  needs  of  our 
social  condition. 


IX 


FURTHER  REGULATION  OF  INTER- 
STATE COMMERCE1 

ONE  of  the  most  important  questions — perhaps 
the  most  important — before  the  country  to-day- 
is  that  of  the  proper  relation  of  the  national  govern- 
ment to  corporations  engaged  in  carrying  on  com- 
merce among  the  States  and  with  foreign  countries. 
The  Sherman  Anti-Trust  Law  was  held  applicable 
to  railroad  companies  in  1897,  but  the  Interstate 
Commerce  Law  of  1887,  and  the  various  amend- 
ments to  it,  particularly  the  Elkins  Law  of  1903,  the 
Hepburn  Act  of  1906,  and  the  Mann-Elkins  Law 
of  1 9 10,  have  dealt  so  comprehensively  and  effec- 
tively with  common  carriers  by  railroad,  express, 
pipe  line,  telegraph,  telephone,  and  to  a  certain 
extent  by  water,  that  but  few  civil  suits  have  been 
brought  against  such  carriers  under  the  Sherman 
Act,  and — so  far  as  I  am  aware — no  criminal 
indictments  have  been  found  for  violation  of  its 
provisions  by  railroad  companies  or  other  carriers. 
The  gradual  interpretation  of  the  Act  of  July  2, 

1  Address  before  Minnesota  State  Bar  Association,  Duluth, 
Minn.,  July  19,  191 1. 

143 


144  The  Changing  Order 

1890,  resulting  in  the  decisions  and  decrees  ren- 
dered by  the  Supreme  Court  at  its  last  term,  has  at 
last  clearly  demonstrated  the  effectiveness  of  that 
law  to  destroy  existing  combinations  in  restraint 
of  interstate  or  international  commerce,  and 
attempts  to  monopolize  any  part  of  it,  and  to 
prevent  renewed  combination  or  monopolistic 
effort. 

The  first  practical  application  of  the  "rule  of 
reason,"  to  combinations  in  violation  of  the  anti- 
trust law,  made  since  the  Supreme  Court  decisions 
in  the  Standard  Oil  and  Tobacco  cases,  was  that 
of  the  United  States  Circuit  Court  for  the  Third 
Judicial  Circuit,  in  the  Government's  suit  against 
the  so-called  Powder  Trust.1  Certainly,  no  per- 
son interested  in  the  maintenance  of  any  monopoly 
or  other  restraints  of  interstate  commerce  can 
derive  comfort  from  the  stern  demonstration  of 
unlawful  combination  contained  in  the  Court's 
opinion  in  that  case,  or  the  impending  doom 
foreshadowed  in  its  decree. 

The  recent  decisions  of  the  Supreme  Court  in 
Standard  Oil  Co.  v.  United  States,  and  American 
Tobacco  Co.  v.  United  States  [says  Judge  Lanning 
in  rendering  the  opinion  of  the  Court]  make  it  quite 
clear  that  the  language  of  the  anti-trust  act  is  not  to 
receive  that  literal  construction  which  will  impair 
rather  than  enhance  freedom  of  interstate  commerce. 
As  we  read  those  decisions,  restraint  of  interstate  trade 

1  United  States  v.  E.  I.  du  Pont  de  Nemours  &  Co.,  et  a/., 
decided  June  21,  191 1,  U.  S.  Cir.  Ct.,  Dist.  of  Delaware. 


Regulation  of  Interstate  Commerce  145 

and  restraint  of  competition  in  interstate  trade  are  not 
interchangeable  expressions.  There  may  be,  under  the 
anti-trust  act,  restraint  of  competition  that  does  not 
amount  to  restraint  of  interstate  trade,  just  as  before 
the  passage  of  the  act  there  might  have  been  restraint 
of  competition  that  did  not  amount  to  a  common  law 
restraint  of  trade.   .    .    . 

While  all  this  is  true,  the  recent  decisions  of  the 
Supreme  Court  make  it  equally  clear  that  a  combina- 
tion cannot  escape  the  condemnation  of  the  anti-trust 
act  merely  by  the  form  it  assumes  or  by  the  dress  it 
wears.  It  matters  not  whether  the  combination  be 
"in  the  form  of  a  trust  or  otherwise,"  whether  it  be  in 
the  form  of  a  trade  association  or  a  corporation,  if  it 
arbitrarily  uses  its  power  to  force  weaker  competitors 
out  of  business  or  to  coerce  them  into  a  sale  to  or 
union  with  the  combination,  it  puts  a  restraint  upon 
interstate  commerce  and  monopolizes  or  attempts  to 
monopolize  a  part  of  that  commerce  in  a  sense  that 
violates  the  anti-trust  act. 

In  determining  the  form  of  decree  to  be  entered, 
the  Circuit  Court  said  that  the  relief  which  it 
proposed  to  give  was  preventive  and  injunctive. 

If  our  decree,  limited  to  that  purpose,  shall  neces- 
sitate a  discontinuance  of  present  business  methods, 
it  is  only  because  those  methods  are  illegal.  The 
incidental  results  of  a  sweeping  injunction  may  be 
serious  to  the  parties  immediately  concerned,  but,  in 
carrying  out  the  command  of  the  statute,  which  is  as 
obligatory  upon  this  Court  as  it  is  upon  the  parties  to 
this  suit,  such  results  should  not  stay  our  hand ;  they 
should  only  challenge  our  care  that  our  decree  be  no 


146  The  Changing  Order 

more  drastic  than  the  facts  of  the  case  and  the  law 
demand.  .  .  .  The  present  decree  will  therefore 
be  interlocutory.  It  will  adjudge  that  the  28  de- 
fendants are  maintaining  a  combination  in  restraint 
of  interstate  commerce  in  powder  and  other  explosives 
in  violation  of  Section  1  of  the  anti-trust  act,  that  they 
have  attempted  to  monopolize  and  have  monopolized 
a  part  of  such  commerce  in  violation  of  section  2  of 
that  act,  that  they  shall  be  enjoined  from  continuing 
said  combination,  and  that  the  combination  shall  be 
dissolved.   .    .    . 


The  decree  further  provided  that  in  order  that 
the  Court  might  obtain  such  further  information 
as  should  enable  it  to  frame  a  final  decree  which 
should  give  effective  force  to  its  adjudication,  a 
hearing  should  be  given  the  parties  at  the  next  term 
4 'as  to  the  nature  of  the  injunction  which  shall  be 
granted  herein  and  as  to  any  plan  for  dissolving 
said  combination,"  the  defendants  being  enjoined 
in  the  meantime  from  doing  any  acts  to  further 
extend  or  enlarge  the  field  of  operation  or  the 
power  of  the  unlawful  combination. 

Therefore,  within  such  time  as  the  ascertainment 
of  facts  and  the  preparation  of  evidence  necessary 
to  the  initiation  and  conduct  of  appropriate  pro- 
ceedings by  the  Government  may  require,  such  of 
the  known  monopolistic  combinations  in  restraint 
of  interstate  trade  and  commerce  as  shall  not 
voluntarily  dissolve,  will  be  brought  before  the 
Courts  for  judgment,  and  the  precedents  fur- 
nished by  the  Standard  Oil,  Tobacco,  and  Powder 


Regulation  of  Interstate  Commerce  147 

cases  afford  some  assurance  of  the  results  which 
may  be  anticipated. 

But  the  question  remains,  can  the  great  end  and 
object  of  the  Sherman  Law — namely,  that  the 
normal  course  of  trade  and  commerce  among  the 
States  shall  not  be  impeded  by  undue  restraints  and 
monopolies — be  realized  through  the  operation  of 
that  law  alone? 

In  dealing  with  transportation,  Congress  was 
not  content  to  rely  simply  on  the  process  of  injunc- 
tion to  restrain,  and  indictment  to  punish  violations 
of  the  anti-trust  law.  It  also  established  an 
administrative  commission  clothed  with  powers — 
greatly  enlarged  from  time  to  time — over  those 
engaged  in  the  transportation  business,  which 
Congress  enacted  should  be  carried  on  for  a  rea- 
sonable compensation  and  without  unjust  discrim- 
ination as  between  parties  or  localities  similarly 
situated.  While  Congress  has  not  specifically 
incorporated  corporations  to  carry  on  such  busi- 
ness— save  in  a  very  few  instances — nor  directly 
licensed  them  to  engage  in  interstate  transporta- 
tion, nor  expressly  exempted  them  from  State 
interference,  the  Federal  Courts  have  substantially 
held  that  Congress,  by  regulating  the  rates  and 
practices  of  common  carriers  in  interstate  com- 
merce, has  prohibited  State  regulation  which  would 
conflict  with  that  of  the  nation.  The  decisions  of 
the  Federal  Courts  on  this  subject  have  not  been 
always  consistent,  and  in  some  instances  State 
legislation  has  been  allowed  effect,   despite  ap- 


148  The  Changing  Order 

parent  conflict  with  Federal  regulation  of  the 
same  subject.  But  in  the  absence  of  direct 
Congressional  exclusion  of  state  law,  or  an  avowed 
direct  and  exclusive  license  system,  or  system 
of  national  incorporation,  the  Courts  have  very 
properly  considered  the  susceptibilities  of  the 
States,  and  have  upheld  State  legislation  when- 
ever it  seemed  to  be  not  destructive  of  national 
control  over  the  essentials  of  interstate  commerce. 

A  more  frankly  logical  system  would  be,  of  course, 
more  satisfactory ;  but  Congress — in  common  with 
other  legislative  bodies — is  apt  to  shrink  from  taking 
a  clearly  logical  position  in  legislation  which  may 
involve  conflict  with  other  sovereignties  or  quasi- 
sovereignties,  and  to  leave  judicial  interpretation 
to  add  to  statutory  authority  a  power  the  legisla- 
ture was  desirous  to  confer,  but  feared  to  express. 

There  are  many  reasons  why  a  similar  attitude 
may  be  expected  when  Congress  comes  to  deal  with 
the  difficult  problem  of  regulating  the  conduct  of 
large  commercial  businesses  among  the  States  by 
corporations. 

The  existing  system,  whereby  every  State 
charters  corporations  without  the  slightest  regard 
to  other  States,  or  to  the  nation,  empowered  to 
roam  at  will — so  far  as  the  creator  is  concerned — 
but  subject  to  any  restriction  or  condition  which 
any  other  State  into  which  they  may  desire  to  go 
in  carrying  on  their  business,  chooses  to  impose, 
naturally  led  to  a  demand  for  authority  in  one 
corporation  to  take  and  hold  stock  in  another,  in 


Regulation  of  Interstate  Commerce  149 

order  that  the  business  of  a  corporation  organized 
in  one  State  might  be  carried  on  in  another  State, 
without  subjecting  the  parent  company  and  its 
entire  capital  and  corporate  organization  to  the 
laws  of  the  latter.  Probably  no  one  thing  has  done 
more  to  facilitate  restraint  of  trade  and  the  growth 
of  monopoly  than  the  departure  from  the  early 
rule  of  law  that  one  corporation  cannot  own  stock 
in  another.  That  departure  was  the  most  baneful 
result  of  the  laissez-faire  policy  in  dealing  with 
corporations  to  which  the  country  abandoned  itself 
during  the  last  thirty  years  of  the  nineteenth 
century.  The  conditions  which  have  resulted 
from  the  exercise  of  the  expressly  conferred  power 
in  one  corporation  to  take  and  hold  stock  in 
another,  present  the  most  serious  obstacles  to 
effectively  dealing  with  the  "trust"  problem. 
For  few  corporations,  if  any,  solely  by  means  of 
the  direct  acquisition  of  property  and  the  widen- 
ing scope  of  their  own  business,  have  acquired  such 
control  of  the  particular  commerce  among  the 
States  with  which  they  are  concerned  as  to  con- 
stitute monopoly,  or  to  threaten  it.  Whenever 
competitors  have  been  excluded  by  unfair  means, 
and  a  very  large  part  of  the  commerce  absorbed 
by  a  particular  interest,  the  machinery  by  which 
such  result  has  been  accomplished  will  be  found 
on  examination  to  be  the  control  of  various 
corporations  by  means  of  intercorporate  stock 
holdings. 

The  cases  of  the  Standard  Oil,  American  To- 


150  The  Changing  Order 

bacco,  the  Powder  Company,  the  American  Sugar 
Refining  Company,  and  others,  furnish  abundant 
judicial  demonstration  of  this  fact. 

In  a  large  number  of  cases,  it  has  been  sought  to 
perpetuate  the  control  secured  by  one  corporation 
through  the  acquisition  of  stocks  of  other  corpora- 
tions, by  pledging  such  stocks  as  security  for 
issues  of  notes  or  bonds ;  and  enormous  amounts  of 
securities  have  been  sold  to  the  public  in  faith  of 
such  pledges. 

If  Congress  should  enact  that  no  corporation 
engaged,  in  interstate  commerce  shall  hereafter 
acquire  any  stock  of  any  other  corporation  so 
engaged,  and  that  unless  all  such  corporations 
should  dispose  of  all  stocks  held  by  them  in  other 
corporations  engaged  in  interstate  commerce 
within  some  specified  period,  they  should  be  pro- 
hibited from  carrying  on  interstate  commerce  until 
they  did  so  dispose  of  such  stocks,  the  axe  would 
indeed  be  laid  at  the  root  of  the  trust  evil;  but 
justice  to  the  innocent  holders  of  securities  issued 
to  the  public  based  on  pledged  stocks,  acquired  and 
held  pursuant  to  express  legal  authority,  would 
require  consideration  to  be  given  to  their  case,  and 
such  exceptions  to  be  made  from  the  prohibitions 
as  might  be  necessary  to  their  protection.  These 
necessary  acts  of  justice  might  seriously  interfere 
with  the  enactment  of  legislation  effective  to  the 
accomplishment  of  the  main  purpose  in  view. 

But  such  drastic  legislation,  while  logical  and 
effective,  is  hardly  to  be  expected,  and  the  ques- 


Regulation  of  Interstate  Commerce  151 

tion  will  therefore  remain:  Within  what  limits 
is  legislation  to  regulate  corporations  engaged  in 
interstate  commerce  other  than  transportation 
expedient  and  practicable?  Should  the  analogy 
of  the  Interstate  Commerce  Law  and  Commission 
be  followed?  Is  any  regulatory  legislation  neces- 
sary besides  the  Sherman  Act  and  the  statutes 
prohibiting  railroad  rebates? 

Conservative  minds  naturally  shrink  from  ac- 
cepting a  conclusion  which  would  devolve  upon  the 
national  government  the  comprehensive  powers 
and  duties  involved  in  extending  the  principles  of 
the  Interstate  Commerce  laws  over  commercial  and 
industrial  corporations;  for  the  increased  centrali- 
zation of  control  in  Washington  over  the  trade  of 
the  country,  the  multiplication  of  Federal  office- 
holders, and  bureaucratic  intermeddling  with 
business,  may  be  necessary,  but  are  undesirable 
incidents  to  the  conduct  of  daily  business  life. 

That  some  further  regulation  over  corporations 
carrying  on  commerce  among  the  States  may  be 
necessary,  is  a  matter  of  current  comment.  It 
has  been  openly  advocated  by  representatives  of 
some  of  the  largest  combinations  of  capital,  per- 
haps as  a  means  of  salvation,  and  to  preserve, 
under  government  supervision,  great  organizations 
whose  continued  existence  is  menaced  by  the 
recent  interpretation  of  the  Sherman  Act,  and  the 
disintegration  of  which  would  be  necessarily 
attended  with  much  loss.  To  such,  it  is  a  case 
of  "any  port  in  a  storm."     Better  continued  co- 


152  The  Changing  Order 

operative  life,  even  under  a  powerful  master,  than 
disseminated  properties  and  segregated  activities, 
without  constant  governmental  supervision. 

But  there  are  other  reasons  for  such  regulation. 
The  Federal  Department  of  Justice  is  not  organ- 
ized or  equipped  to  maintain  constant  supervision 
and  control  over  business  organizations.  It  deals 
only  with  cases  of  violation  of  the  law.  The  ac- 
tivities of  an  administrative  board  or  commission 
would  be  directed  to  preventing  such  violations, 
and  in  aiding  business  men  to  maintain  a  continued 
status  of  harmony  with  the  requirements  of  law. 

Moreover,  unless  Congress  shall  provide  for  the 
establishment  of  corporations  drawing  their  life 
and  powers  only  from  the  national  government, 
and  subject  only  to  its  control,  or  shall  confer 
specific  powers  on  State  corporations  which  will 
enable  them  to  carry  on  commerce  away  from  the 
State  of  their  creation,  without  the  interference 
of  States  into  which  they  go,  the  present  unsatis- 
factory condition  of  conducting  business  in  the 
different  States  by  means  of  many  different  cor- 
porations, owned  or  controlled  through  stock 
ownership  by  a  parent  company  created  by  some 
one  State,  will  continue,  and  in  the  natural,  normal, 
healthy,  and  legitimate  growth  of  such  business, 
questions  of  the  application  of  the  Sherman  Law 
must  arise,  which  cannot  property  be  settled  with 
the  District  Attorney  or  the  Department  of  Justice, 
but  should  be  dealt  with  by  an  administrative  body 
having  appropriate  jurisdiction. 


Regulation  of  Interstate  Commerce  153 

There  are  still  further  considerations  involved 
in  the  question.  The  tendency  of  this  age  is 
toward  cooperation  in  every  field  of  activity. 
The  early  form  of  cooperative  business  effort  by 
means  of  partnerships  was  found  insufficient  for 
large  enterprises,  because  of  the  unlimited  liability 
imposed  on  the  partners,  and  the  inelastic  char- 
acter of  the  investment.  The  great  commercial 
development  of  the  country  would  scarcely  have 
been  possible  but  for  the  introduction  of  coopera- 
tion in  the  form  of  corporations  for  business 
purposes,  in  the  early  part  of  the  nineteenth  cen- 
tury. The  growth  of  the  incorporated  companies, 
the  development  of  close  relations  between  them 
by  agreement,  and  through  reciprocal  stock 
ownership,  so  unified  their  power  and  extended 
their  control,  that  their  employees  were  driven  to 
cooperative  association  for  protection  against  the 
suppression  of  their  rights,  and  for  the  purpose  of 
compelling  better  recognition  of  their  claims  to 
larger  recognition  in  the  division  of  profits.  The 
problems  of  modern  commercial  life  are  vast. 
They  affect  not  only  employer  and  employed,  but 
the  public.  Facilities  of  transportation  and  for 
the  transmission  of  intelligence  have  brought  all 
parts  of  the  world  into  close  touch.  Any  eco- 
nomic disturbance  in  one  part  of  the  country 
affects  to  a  greater  or  less  extent  every  other  part 
of  the  country.  Common  needs  have  developed, 
and  commodities  of  many  kinds  are  standardized. 
Prices,  should  be  reasonable.     Destructive  com- 


154  The  Changing  Order 

petition,  while  it  is  attended  with  abnormally  low 
prices,  never  produces  reasonable  prices.  Indeed, 
abnormal  price  is  one  of  the  indicia  of  monopoly. 
Fair  competition  is  essential  to  healthy  national 
life,  but  it  is  more  than  doubtful  whether  or  not 
there  can  be  fair  competition  without  concert  of 
action  or  cooperative  effort  to  some  extent. 
Business  men  of  integrity  are  naturally  desirous 
of  avoiding  violations  of  law.  The  construction 
of  the  Sherman  Law  originally  contended  for  would 
have  condemned  them  for  any  concerted  action 
which  imposed  any  restraint  on  trade.  The  more 
enlightened  view  which  has  been  expressed  by  the 
Supreme  Court  limits  the  prohibition  to  undue 
restraints — those  which  are  not  the  result  of  nor- 
mal business  methods,  but  which  are  intended  to 
accomplish,  or  have  for  their  direct  and  primary 
purpose,  interference  with  the  natural  course  of 
trade  and  commerce  among  the  States  or  with 
foreign  countries.  Yet  even  within  these  rules, 
it  is  contended,  there  is  an  area  of  activity  where 
cooperation  and  association  should  only  have  play 
under  government  supervision  and  control. 

With  such  supervision,  a  natural  economic  force 
may  be  utilized  to  the  public  benefit  and  to  the 
general  satisfaction  of  the  commercial  world.  By 
it,  while  monopolies  and  restraints  of  trade  will 
still  be  held  at  bay  by  the  terrors  of  the  anti- 
trust act,  thousands  of  small  traders  may  by 
regulated  cooperation  protect  themselves  from 
the  ruin  of  destructive  competition  on  the  one 


Regulation  of  Interstate  Commerce  155 

hand,  and  from  the  constant  apprehension  of 
indictment  on  the  other. 

Whether  or  not  such  a  Federal  Industrial  Com- 
mission should  have  power  to  regulate  prices  would 
almost  certainly  arise  for  serious  consideration. 
The  Interstate  Commerce  Law  prescribes  as  a  legis- 
lative rule  that  prices  for  transportation  by  rail, 
or  wire,  or  pipe  line,  shall  be  reasonable,  and  that 
no  unjust  discrimination  shall  be  made  between 
individuals  or  localities  similarly  situated.  It 
leaves  it  to  the  Commission  to  determine  when  this 
legislative  standard  is  departed  from  and  to  take 
proceedings  appropriate  to  compel  compliance 
with  it.  A  similar  rule  might  be  declared  by 
Congress  with  respect  to  the  prices  of  commodities 
the  subject  of  interstate  commerce. 

We  have  become  accustomed  to  the  regulation 
of  rates  of  transportation,  but  the  suggestion  that 
prices  of  commodities  be  regulated  by  Congress 
seems  novel  and  radical.  Yet  the  principle  on 
which  the  regulation  of  transportation  rates  is 
based,  is  simply  that  when  property  is  used  in  a 
manner  to  make  it  of  public  consequence  and  affect 
the  community  at  large  it  becomes  clothed  with  a 
public  use,  and  may  be  controlled  by  the  public 
for  the  common  good.  In  the  early  days  in  some 
parts  of  this  country  statutes  were  enacted  to 
regulate  the  business  of  millers  and  the  rates  they 
might  charge  for  grinding.  At  that  time  it  was 
a  matter  of  public  concern  that  every  farmer  should 
have  the  right  to  have  his  corn  ground   at  a 


156  The  Changing  Order 

reasonable  rate.  So  to-day  the  conduct  of  the 
great  commerce  in  staple  articles  among  the  States 
is  become  a  matter  of  public  consequence,  and  the 
courts  have  upheld  legislation  regulating  it  by- 
prescribing  some  of  the  conditions  under  which  it 
may  be  carried  on.  To  require  as  one  of  these  con- 
ditions that  prices  for  commodities  dealt  in  inter- 
state commerce  must  be  reasonable,  only  involves 
a  new  application  of  the  same  principle. 

Indeed,  unless  prices  be  dealt  with  under  such  a 
law  it  would  fail  to  reach  the  essential  evil;  for 
" unified  tactics  with  regard  to  prices"  has  been 
authoritatively  declared  to  be  the  essence  of 
modern  monopoly,  and  as  was  said  in  the  case  of 
National  Cotton  Oil  Co.  v.  Texas  (197  U.  S.,  115- 
129),  "It  is  the  power  to  control  prices  which 
makes  the  inducement  of  combinations  and  their 
profit.  It  is  such  power  that  makes  it  the  con- 
cern of  the  law  to  prohibit  or  limit  them."  But 
legislative  control  of  prices  smacks  of  medieval 
sumptuary  legislation  and  is  foreign  to  the  genius 
of  our  institutions.  Students  of  Adam  Smith  are 
taught  to  believe  that  the  natural  price  of  an  arti- 
cle is  that  which  is  fixed  by  the  operations  of  the 
natural  unrestrained  law  of  supply  and  demand, 
working  without  any  artificial  restraint.  The 
anti-trust  legislation  of  the  United  States  and  of 
most  of  the  States  is  based  upon  this  theory.  It 
is  said  in  The  Wealth  of  Nations: 

The  price  of  monopoly  is  upon  every  occasion  the 
highest  which  can  be  got.     The  natural  price,  or  the 


Regulation  of  Interstate  Commerce  157 

price  of  free  competition,  on  the  contrary,  is  the  lowest 
which  can  be  taken,  not  upon  every  occasion,  indeed, 
but  for  any  considerable  time  together.1 


But  the  fact  is,  that  the  law  of  supply  and  de- 
mand does  not  and  has  not  for  many  years  worked 
in  this  country  in  a  natural,  unrestrained,  and 
unfettered  manner.  The  Government,  in  the  first 
instance,  interposes  an  artificial  restraint  in  the 
protective  tariff  on  imports.  True,  the  theory  of 
this  tariff  is  to  equalize  conditions  of  competition; 
to  place,  as  it  were,  a  handicap  on  the  foreign 
competitor  who  has  produced  his  commodities 
under  conditions  less  burdensome  than  those 
under  which  the  American  manufacturer  pro- 
duces his.  In  fact,  the  inequalities  resulting 
from  the  methods  of  tariff  legislation  are  very 
often  impossible  to  justify  on  the  theory  of 
sufficient  protection  only,  and  the  resulting  price  is 
that  fixed  by  a  limited  competition  between  dealers 
in  the  market  from  which  foreign  competitors  are 
to  a  certain  extent  excluded.  Nor  is  this  all :  It  is 
probably  safe  to  say  that  in  almost  every  one  of 
the  great  staple  industries,  prices  have  been  for 
years  fixed  by  agreement  between  the  principal 
producers,  and  not  by  the  normal  play  of  free  com- 
petition even  among  the  domestic  producers,  nor 
by  the  unfettered  operation  of  the  law  of  supply 
and  demand. 

1  Ed.  Geo.  Bell  &  Co.,  London  and  New  York,  1896,  vol.  i., 
p.  62. 


158  The  Changing  Order 

Take,  for  instance,  the  facts  concerning  the 
powder  and  explosive  business,  as  found  by  the 
United  States  Circuit  Court  in  the  recently  decided 
case  to  which  I  have  already  referred. 

The  record  of  the  case  now  before  us  [said  Judge 
Lanning]  shows  that  from  1872  to  1902,  a  period  of 
thirty  years,  the  purpose  of  the  trade  associations 
had  been  to  dominate  the  powder  and  explosives 
trade  in  the  United  States  by  fixing  prices,  not 
according  to  any  law  of  supply  and  demand,  for 
they  arbitrarily  limited  the  output  of  each  member, 
but  according  to  the  will  of  their  managers.  It  ap- 
pears, further,  that  although  these  associations  were 
not  always  strong  enough  to  control  absolutely  the 
prices  of  explosives,  their  purpose  to  do  so  was  never 
abandoned.  Under  the  last  of  the  trade  association 
agreements — the  one  dated  July  1 ,  1896,  and  which  was 
in  force  until  June  30,  1904 — the  control  of  the  com- 
bination was  firmer  than  it  had  before  been.  Succeed- 
ing the  death  of  Eugene  du  Pont  in  January,  1902, 
and  the  advent  of  Thomas  Coleman  du  Pont  and 
Pierre  S.  du  Pont,  the  attempt  was  made  to  continue 
the  restraint  upon  interstate  commerce  and  the 
monopoly  then  existing,  by  vesting,  in  a  few  corpora- 
tions, the  title  to  the  assets  of  all  the  corporations  affili- 
ated with  the  trade  association,  then  dissolving  the 
corporations  whose  assets  had  been  so  acquired, 
and  binding  the  few  corporations  owning  the  operating 
plants  in  one  holding  company,  which  should  be  able 
to  prescribe  policies  and  control  the  business  of  all  the 
subsidiaries  without  the  uncertainties  attendant  upon 
a  combination  in  the  nature  of  a  trade  association. 
That  attempt  resulted  in  complete  success. 


Regulation  of  Interstate  Commerce  159 

For  years,  the  Court  said,  trade  agreements 
between  all  manufacturers  of  powder  and  explosives 
in  the  United  States  have  been  in  existence.  There 
were  times  when  the  parties  to  these  agreements 
broke  away  from  and  disregarded  them,  but  usually 
the  fines  and  penalties  imposed  on  the  violators 
were  effective  to  protect  and  effectuate  them. 

A  large  number  of  indictments  recently  found 
in  the  Southern  District  of  New  York,  were  based 
upon  evidence  of  the  continued  existence  during 
a  number  of  years,  and  until  a  recent  date,  of 
pools,  or  associations  of  manufacturers  of  various 
kinds  of  wire,  under  which  official  and  noncom- 
petitive prices  were  fixed,  determined,  agreed 
upon,  and  maintained. 

The  fact  seems  to  be,  that  the  prices  of  many 
standard  articles  of  consumption  sold  in  the  United 
States  for  a  number  of  years  past  have  not  been 
fixed  at  all  by  the  operation  of  the  laws  of  supply 
and  demand,  or  by  unrestrained  competition,  but 
by  associations  of  the  producers,  without  the 
participation  of  the  consumer  or  the  general  public 
— that  is,  without  those  who  have  had  to  pay  the 
bill  having  any  voice  in  fixing  the  price.  In  this 
view,  it  is  certainly  not  unreasonable  that  the 
purchasing  public  should  desire  to  have  some  part 
in  determining  the  price  it  is  to  pay — in  like  man- 
ner as  has  been  recognized  to  be  just  with  respect 
to  the  cost  of  transportation. 

If  there  could  be  any  assurance  that  the  free 
play  of  competition  would  be  assured,  and  the 


160  The  Changing  Order 

natural  price  resulting  from  the  unrestrained 
operation  of  supply  and  demand  maintained,  then 
no  governmental  supervision  of  business — beyond 
occasional  prosecutions  for  violations  of  the  Sher- 
man Law — would  be  necessary.  But  the  habits 
formed  through  years  of  following  a  system  are  not 
easily  shaken  off,  and  the  artificial  forms  of  or- 
ganizations made  necessary  by  the  conflicting 
laws  of  many  States  with  those  of  the  nation  will 
always  present  a  border  land  of  doubt,  which  will 
furnish,  on  the  one  hand,  opportunities  for  those 
who  wish  to  violate  the  law  to  do  so  with  some 
show  of  justification ;  and  on  the  other,  to  perplex 
those  who  are  sincerely  desirous  of  keeping  the 
law,  but  by  reason  of  the  complexity  and  conflict 
of  different  State  laws  find  it  difficult  to  do  so 
without  seeming  to  run  counter  to  the  anti-trust 
law.  The  supervision  of  a  Federal  commission 
might  supply  a  satisfactory  method  of  reaching 
this  difficulty. 

In  theory,  it  would  seem  that  such  a  commission 
should  have  some  power  over  prices;  but  the  prac- 
tical difficulties  in  the  way  of  exercising  such  power 
so  as  not  to  inflict  a  greater  evil  than  that  it  is 
intended  to  cure,  are  so  great  as  perhaps  to  be 
insurmountable.  It  would  be  well-nigh  impossible 
to  fix  a  maximum  price  which  would  not  be,  on  the 
one  hand  unjust  to  the  small  producer,  and  on  the 
other  hand  unduly  to  increase  the  profit  of  the  large 
producer.  For  the  large  producer,  with  an  ad- 
equate supply  of  raw  material,  and  the  economies 


Regulation  of  Interstate  Commerce  161 

and  efficiencies  only  possible  with  a  large  capital 
and  extensive  organization,  can  always  afford  to 
sell  at  prices  which  would  be  ruinous  to  the  small 
producer. 

These  problems  go  to  the  very  root  of  the  con- 
tinued prosperity  of  our  people.  They  can  only 
be  solved  by  a  careful  consideration  free  from  any 
partisan  bias.  I  have  not  attempted  to  express  a 
conclusion,  but  merely  to  state  the  elements  of  a 
problem  which,  if  wisely  determined,  will  "scatter 
plenty  o'er  a  smiling  land,"  and  if  unwisely  dealt 
with,  may  paralyze  the  hand  of  industry  that  mak- 
eth  rich — not  with  the  unequal  wealth  of  monopoly, 
but  with  the  distributed  wealth  which  brings 
national  prosperity  and  continued  peace. 


X 


RESULTS  OF  THE   TRUST  DISSOLUTION 
SUITS1 

THE  trust  question ;  that  is  the  question  of  the 
proper  relation  of  the  Government  to  large 
business  organizations,  is  a  great  economic  ques- 
tion which  should  not  be  made  the  football  of 
politics.  The  men  who  united  in  framing  the 
Sherman  Anti-trust  Law  were  Democrats  as 
well  as  Republicans.  In  the  final  debate  in  the 
Senate,  one  of  the  clearest  statements  of  the 
need  and  purpose  of  that  legislation,  was  made 
by  Senator  George,  a  Democratic  Senator  from 
Mississippi. 

Since  President  Taft  came  into  office,  eleven 
(n)  final  decrees  have  been  entered  in  equity  suits 
brought  by  the  Government  under  the  Sherman 
Law  to  prevent  and  restrain  violations  of  the  act ; 
two  (2)  large  combinations  of  competitive  con- 
cerns have  been  voluntarily  dissolved,  following 
criminal  prosecutions  of  individuals  concerned  in 
them;  and  in  one  other  instance,   a  temporary 

1  From  an  Address  before  the  Finance  Forum,  West  Side 
Young  Men's  Christian  Association,  New  York,  Nov.  13,  19 12. 

162 


Results  of  Trust  Dissolution  Suits  163 

injunction  resulted  in  the  abandonment  of  a 
comprehensive  movement  to  increase  railroad 
rates,  prior  to  the  enactment  of  the  law  which  gave 
to  the  Interstate  Commerce  commission  power  to 
prevent  increases  until  it  should  have  investigated 
the  justice  of  making  them.  Of  these  decrees, 
three  (namely,  those  against  the  Standard  Oil 
Combination,  the  Tobacco  combination,  and  the 
Powder  combination)  were  directed  against  what 
are  technically  known  as  trusts;  that  is,  the  kind 
of  things  spoken  of  by  Senator  Sherman  when  he 
introduced  his  original  bill  into  the  Senate  in 
March,  1890: 

Associated  enterprise  and  capital  are  not  satisfied 
with  partnerships  and  corporations  competing  with 
each  other,  and  they  have  invented  a  new  form 
of  combination  commonly  called  trusts,  that  seek 
to  avoid  competition,  by  combining  the  controlling 
corporations,  partnerships  and  individuals  engaged 
in  the  same  business,  and  placing  the  power  and 
property  of  the  combination  under  the  government 
of  a  few  individuals.  .  .  . 

Perhaps  the  simplest  definition  of  a  modern  trust 
is  "a  partnership  of  competitive  corporations." 
Now,  the  decrees  in  the  cases  above  mentioned 
struck  down  three  of  the  greatest  existing  partner- 
ships of  competitive  corporations  controlling 
great  industries  which  ever  have  grown  up  in  the 
United  States.  They  also  established  the  prin- 
ciple that  monopoly  and  unfair  restraint  of  com- 


164  The  Changing  Order 

petition  could  not  successfully  entrench  themselves 
behind  stock  ownership;  but  that  in  whatever 
form  the  control  of  great  industries  is  absorbed 
into  a  few  hands,  the  law  can  search  into  the 
organization,  and  if  it  be  found  that  an  undue 
restraint  is  put  upon  interstate  commerce,  or  a 
monopoly  threatened,  the  Court  can  end  that 
restraint  or  break  up  that  monopoly. 

In  another  case,  namely,  the  suit  against  the 
Terminal  Association  of  St.  Louis,  the  unification 
of  substantially  every  terminal  facility  by  which 
the  traffic  of  that  city  was  served,  was  scrutinized 
by  the  Supreme  Court,  and,  recognizing  the 
peculiar  topographical  conditions  of  the  city,  the 
combination  was  permitted  to  continue;  but  only 
upon  condition  that  its  organization  be  so  modified 
that  the  Association  should  act  as  the  impartial 
agent  of  every  line  which  was  under  compulsion 
to  use  its  instrumentalities. 

Eight  (8)  of  the  other  decrees  mentioned  ran 
against  combinations  of  (i)  manufacturers  of 
incandescent  electric  lamps;  (2,  3)  manufacturers 
of  plumbing  supplies  and  of  sanitary  enamel  ware; 
(4)  wholesale  grocers;  (5)  manufacturers  and 
dealers  in  kindling  wood;  (6)  manufacturers  of 
window  glass;  (7)  manufacturers  of  what  is  known 
as  plate  matter  and  ready  print  matter  for  use  in 
newspapers;  and  (8)  manufacturers  and  importers 
of  aluminum  and  the  raw  material  from  which  it  is 
produced.  All  of  these  were  cases  where  indepen- 
dent  manufacturers   or   dealers — competitors   in 


Results  of  Trust  Dissolution  Suits  165 

business — had  united  in  various  agreements,  hav- 
ing for  their  purpose  and  necessary  effect  the 
fixing  of  prices,  control  of  territory,  and  partition- 
ing of  business  among  themselves,  and  the  exclu- 
sion of  competition. 

Following  the  prosecution  of  the  Beef  Packers 
in  Chicago,  who  were  charged  with  combining 
for  the  purpose  of  controlling  the  price  in  meat 
and  meat  products,  the  National  Packing  Com- 
pany (a  corporation  which  had  been  organized  to 
take  over  a  very  large  number  of  competing  plants 
which  had  been  acquired  by  representatives  of  the 
three  great  packing  interests)  was  dissolved,  and  its 
properties  scattered  all  over  the  United  States,  ag- 
gregating upwards  of  sixty  million  dollars  in  value, 
were  distributed  pro  rata  to  and  among  the  owners 
of  the  stock  of  the  Packing  Company.  This 
distribution  was  so  made  as  not  only  to  remove 
the  restraint  on  competition  which  was  wrought 
by  keeping  all  of  these  properties  under  one  cor- 
porate control,  but  in  many  instances  to  induce 
competition  in  places  where  there  was  previously 
none.  Moreover,  many  of  these  plants  had  been 
conducted  under  the  names  of  their  original  own- 
ers, their  actual  ownership  being  unknown.  This 
practice  was  terminated,  and  the  business  at  these 
plants  is  now  being  conducted  in  the  names  of  their 
actual  owners.  Besides  these  cases,  in  which  final 
decrees  have  been  actually  entered,  suits  are  pend- 
ing and  now  being  actively  prosecuted  against  such 
large  combinations  as: 


166  The  Changing  Order 

The  United  States  Steel  Corporation ;  the  Ameri- 
can Sugar  Refining  Company;  the  National  Cash 
Register  Company;  the  United  Shoe  Machinery 
Company;  the  Keystone  Watch  Case  Company; 
the  American  Naval  Stores  Company  (known  as 
the  turpentine  trust)  the  International  Harvester 
Company;  the  New  Departure  Company  (the 
combination  manufacturing  and  controlling  coaster 
brakes). 

These  various  concerns  are  charged  with  exist- 
ing in  violation  of  the  anti-trust  law. 

A  suit  to  terminate  the  control  by  the  Union 
Pacific  Railroad  system  of  the  Southern  Pacific 
Railroad  system  has  been  argued  in  the  Supreme 
Court  of  the  United  States  and  now  awaits  deci- 
sion. x  A  suit  to  dissolve  the  combination  between 
the  carriers  and  producers  of  anthracite  coal  in 
Pennsylvania,  New  Jersey,  and  New  York  has  also 
been  argued  in  the  Supreme  Court  and  awaits 
decision.2  A  suit  to  terminate  a  combination  of 
bituminous  coal-carrying  roads  in  Ohio  and  West 
Virginia  has  been  argued  and  submitted  to  the 
Circuit  Court  of  Appeals  in  the  Ohio  circuit,  and 
awaits  decision.3  Four  (4)  different  suits  are 
pending  against  combinations  of  steamship  lines 
which  control  certain  forms  of  traffic  between  the 

1  Decided  in  favor  of  the  Government,  Dec.  12, 1912  (226  U.  S., 
61,  470). 

3  Decided  partly  in  favor  of  Government,  partly  in  favor  of 
defendants,  Dec.  16,  1912  (226  U.  S.,  324). 

3  Decided  in  favor  of  the  Government,  Dec.  28,  191 2.  Final 
decree  entered  March  14,  1914. 


Results  of  Trust  Dissolution  Suits  167 

United  States  and  foreign  countries;  five  (5)  suits 
are  pending  against  combinations  of  lumber  dealers 
formed  for  the  purpose  of  regulating  and  control- 
ling competition  in  that  business,  and  especially  of 
preventing  retail  dealers  from  purchasing  directly 
from  the  wholesalers,  instead  of  buying  directly 
from  jobbers;  one  (1)  suit  is  pending  against  a 
combination  of  magazine  publishers  formed  to 
control  prices  and  fix  the  terms  on  which  retailers 
may  deal  in  their  publications;  and  one  (1)  suit 
against  a  combination  of  bill-posters,  organized 
to  monopolize  the  business  of  bill-posting  through- 
out the  United  States,  was  recently  brought  and 
is  now  pending.  A  prosecution  of  a  number  of 
persons  engaged  in  a  pool  formed  for  the  purpose  of 
controlling  the  entire  supply  of  free  cotton  of  a 
given  season  has  been  twice  argued  in  the  Supreme 
Court  and  awaits  decision.1 

Now,  before  considering  the  effect  of  all  these 
suits,  we  must  first  stop  to  consider  what  the  law 
upon  which  they  are  based  was  intended  to  accom- 
plish, because  that  must  be  the  criteria  by  which 
to  judge  the  results  achieved.  There  seems  to  be  a 
good  deal  of  popular  misconception  on  this  point, 
and  much  current  discussion  has  proceeded,  ap- 
parently on  the  theory  that  the  object  of  the  law 
was  to  secure  the  confiscation  or  destruction  of  the 
property  employed  by  the  combinations  declared 
to  be  illegal  by  the  act.     Indeed  much  of  the 

1  Decided  in  favor  of  the  Government,  Jan.  6, 1913  (226  U.  S.t 

525). 


1 68  The  Changing  Order 

criticism  of  the  results  of  the  dissolution  of  the 
Tobacco  and  the  Standard  Oil  combinations  has 
been  based  simply  upon  the  fact  that  the  selling 
value  of  the  stocks  of  the  constituent  companies 
had  increased. 

Yet  the  Supreme  Court  declared  in  the  Standard 
Oil  case,  and  reiterated  in  the  St.  Louis  Terminal 
case,  that  while  injury  to  the  public  by  the  pre- 
vention of  an  undue  restraint  on,  or  the  monopoliza- 
tion of,  trade  or  commerce,  is  the  foundation  upon 
which  the  prohibitions  of  the  statute  rest,  one  of 
the  fundamental  purposes  of  the  statute  is  to 
protect,  and  not  to  destroy  rights  of  property.  And 
in  the  Tobacco  case,  the  Supreme  Court  laid  great 
stress  upon  its  duty,  while  giving  complete  and 
efficacious  effect  to  the  prohibitions  of  the  statute, 
to  do  so  with  as  little  injury  as  possible  to  the 
interests  of  the  general  public,  and  with  a  proper 
regard  to  the  vast  interests  of  private  property 
involved. 

This  principle  was  observed  in  the  Standard 
Oil  decree,  by  directing  the  distribution  of  the 
stocks  of  the  corporations  held  by  the  New  Jersey 
Company  pro  rata  among  its  stockholders,  and 
enjoining  the  several  corporations  from  in  the 
future  doing  any  acts  of  the  character  of  those  by 
which  the  combination  had  been  created  and 
maintained.  In  the  Tobacco  case,  where  upwards 
of  an  hundred  millions  of  bonds,  and  nearly  eighty 
millions  of  preferred  stock  in  the  hands  of  the 
investing  public  were  involved,  the  Court  ordered 


Results  of  Trust  Dissolution  Suits  169 

such  a  distribution  of  the  properties  of  the  com- 
bination among  fourteen  separate  corporations 
as  should  give  to  no  one  of  them  an  actual  or 
potential  monopoly  of  any  part  of  the  business, 
and  then  enjoined  those  companies  from  methods 
of  organization  or  business  which  would  make 
possible  new  combination  or  monopoly. 

The  first  great  combination  that  was  broken 
up  under  the  Sherman  Law  was  one  of  manufac- 
turers of  sewer  pipe,  to  divide  territory,  suppress 
competition  in  bidding,  and  control  the  prices  of 
their  product.  This  was  consummated  by  the 
judgment  of  a  Circuit  Court  of  Appeals  presided 
over  by  President  Taft,  when  he  was  Circuit  Judge, 
which  was  unanimously  affirmed  by  the  Supreme 
Court  in  1899. 

The  next  great  result  obtained  was  the  dissolu- 
tion of  the  Northern  Securities  Company  in  1904. 
The  decree  there  practically  compelled  the  Securi- 
ties Company  to  distribute  the  stocks  of  the  two 
great  trans-continental  railroad  companies  which 
it  held  (that  is,  the  Northern  Pacific  and  Great 
Northern)  pro  rata  among  its  stockholders.  The 
immediate  result  of  that  distribution  was  to  make 
the  same  people  owners,  in  the  same  proportion, 
of  the  stocks  of  those  two  competing  systems. 
That  was,  however,  but  a  temporary  condition, 
and  for  a  long  time  past  no  one  has  suggested  that 
these  two  systems  are  under  a  common  control. 
It  was  also  followed  by  an  enormous  rise  in  the 
market   price   of   these   railroad   stocks;  yet   no 


170  The  Changing  Order 

one  has  ever  questioned  the  great  benefit  resulting 
to  the  public  from  the  termination  of  the  unified 
control  over  those  two  particular  systems;  and, 
far  more  important,  it  resulted  in  arresting  the 
process  of  concentrating  the  ownership  of  railroads 
into  a  few  hands,  which  was  then  going  rapidly- 
forward. 

The  third  great  step  in  the  enforcement  of  this 
law  was  its  application  to  the  great  industrial  trusts 
in  the  Standard  Oil  and  Tobacco  cases.  The 
beneficial  results  of  those  decisions  ought  not  to 
be  obscured  by  the  temporary  high  prices  of  the 
stocks  of  the  constituent  companies  quoted  on  the 
curb  market.  There  is  a  perfectly  obvious  reason 
for  these  high  prices.  Before  the  Government 
suits  were  brought,  no  outsiders  knew  anything 
about  the  value  of  the  properties  of  the  Standard 
Oil  combination ;  nor  with  accuracy  of  the  Tobacco 
trust.  The  evidence  adduced  in  those  suits 
afforded  the  public  some  idea  of  the  vast  amount  of 
property  which  had  been  acquired  by  them,  and 
led  to  the  speculative  prices  which  followed  the 
distribution.  The  great  accomplishment  of  the 
decisions  is  in  wiping  away  all  artificial  barriers 
to  the  enforcement  of  the  law,  establishing  its 
supremacy  over  the  largest  combinations,  and 
demonstrating  its  sufficiency  to  reach  the  actual 
evil  of  monopoly,  no  matter  in  what  form  it  is 
clothed. 

The  properties  and  business  of  the  Standard  Oil 
combination  were  distributed  among  more  than 


Results  of  Trust  Dissolution  Suits  171 

thirty  corporations,  which  were  compelled  there- 
after to  conduct  their  businesses  separately  and 
independently  of  each  other.  The  properties  and 
businesses  of  the  Tobacco  combination  were  dis- 
tributed among  fourteen,  and  those  of  the  Powder 
trust,  among  three  separate  corporations.  The 
decrees  prohibited  the  different  companies  from 
having  common  directors,  common  officers,  com- 
mon agents;  from  occupying  the  same  offices; 
from  making  contracts  with  each  other  tending  to 
prevent  the  freest  competition  and  the  most  inde- 
pendent action;  from  carrying  on  business  in 
any  name  but  their  own,  and  from  lending  finan- 
cial assistance  to  each  other.  In  the  decrees 
against  the  various  combinations  of  independ- 
ent manufacturers  formed  by  agreement  among 
themselves,  a  large  variety  of  practices  which  in 
the  past  had  resulted  in  crushing  out  fair  and 
useful  competition,  and  in  centralizing  control 
over  the  business  in  the  combination,  have  been 
expressly  prohibited.  Thus,  in  the  suit  against 
the  Pacific  Coast  Plumbing  Supply  Association 
twenty-four  corporations  and  sixty  individuals 
were  enjoined: 

From  combining,  etc.,  to  prevent  manufacturers 
of  plumbing  supplies  from  selling  to  persons  not 
members  of  the  association  or  not  listed  in  a  blue 
book  published  by  the  association; 

From  publishing  any  such  book; 

From  publishing  any  list  of  manufacturers 
who  had  not  agreed  to  sell  only  to  members  of 


172  The  Changing  Order 

the  association  or  to  persons  listed  in  the  blue 
book; 

From  advertising  lists  of  persons  in  the  business 
who  are  not  members  of  the  association; 

From  combining  to  boycott  a  manufacturer  for 
having  sold  to  persons  not  members  of  the  associ- 
ation and  not  listed  in  the  blue  book; 

From  conspiring  to  prevent  persons  located  in  a 
given  territory  from  purchasing  plumbing  supplies 
from  manufacturers  or  other  dealers; 

From  communicating  with  a  manufacturer  or 
dealer  to  induce  him  not  to  sell  to  persons  not 
members  of  the  association  or  not  conforming  to 
the  definition  of  a  jobber,  given  in  the  blue  book. 

In  the  decree  against  the  manufacturers  of 
electrical  incandescent  lamps,  a  large  number  of 
corporations,  all  of  whose  stock  was  owned  by  the 
General  Electric  Company,  had  carried  on  business 
ostensibly  as  independent  companies,  but  really 
under  the  control  of  the  General  Electric  Company ; 
they  were  ordered  to  be  dissolved  and  their  busi- 
ness in  the  future  to  be  conducted  in  the  name  of 
the  General  Electric  Company.  The  making  and 
performance  of  certain  contracts  whereby  the 
manufacturers  agreed  to  sell  goods  only  to  the 
General  Electric,  or  as  permitted  by  them,  or  on 
terms  or  prices  fixed  by  them,  were  enjoined. 
Independent  competitive  companies  were  enjoined 

From  fixing  prices  by  agreement; 

From  maintaining  by  agreement,  differentials 
between  lamps  which  did  not  in  fact  differ  in 


Results  of  Trust  Dissolution  Suits  173 

quality  or  efficiency  and  from  allowing  discounts 
based  on  the  aggregate  of  purchases  from  different 
manufacturers. 

From  making  agreements  with  jobbers,  etc., 
under  which  they  could  only  secure  goods  manu- 
factured by  the  General  Electric  Company  on 
condition  of  agreeing  to  take  all  other  goods 
manufactured  by  them; 

From  making  more  favorable  terms  of  sale  to 
customers  of  any  rival  manufacturer  than  it  at 
the  same  time  offered  to  its  established  trade,  with 
the  purpose  of  driving  such  rival  out  of  business. 

An  interesting  decree  was  rendered  in  the  case 
against  the  Central  West  Publishing  Company 
and  the  Western  Newspaper  Union.  These  two 
concerns  are  substantially  the  only  ones  in  the 
country  engaged  in  the  business  of  manufacturing 
and  selling  ready-print  papers,  and  stereotype 
plates,  both  of  which  are  used  by  a  vast  number 
of  newspapers,  largely  the  country  press.  They 
were  enjoined  against  combining  with  each  other 
and  thus  preventing  any  competition  whatever  in 
the  business,  and  they  were  both  enjoined: 

1.  From  underselling  any  competing  service 
with  the  intent  or  purpose  of  injuring  or  destroying 
a  competitor. 

2.  From  sending  out  traveling  men  for  the 
purpose  or  with  instructions  to  influence  the  cus- 
tomers of  the  competitors  or  either  of  them  so  as 
to  secure  the  trade  of  the  customers,  without  regard 
to  the  price. 


174  The  Changing  Order 

3.  From  selling  their  goods  at  less  than  a  fair 
and  reasonable  price  with  the  purpose  or  intent 
of  injuring  or  destroying  the  business  of  a  com- 
petitor. 

4.  From  threatening  any  customer  of  a  com- 
petitor with  starting  a  competing  plant  unless  he 
patronized  the  defendant. 

5.  From  threatening  the  competitors  of  either 
one  that  they  must  either  cease  competing  with 
the  defendants  or  sell  out  to  one  of  the  defendants, 
under  threat  that  unless  they  did  so  their  business 
would  be  destroyed  by  the  establishment  of  nearby 
plants  to  compete  with  them. 

6.  From  in  any  manner,  directly  or  indirectly, 
causing  any  person  to  purchase  stock  or  become 
interested  in  the  other  for  the  purpose  or  effect 
of  harassing  it  with  unreasonable  demands  or 
inquiries. 

7.  From  circulating  reports  injurious  to  the 
business  of  the  other. 

8.  From  persuading  customers  of  competitors 
to  violate  contracts  made  with  them  by  under- 
taking to  indemnify  them  against  loss  and  damage 
by  reason  of  so  doing. 

Every  one  of  these  decrees  dealt  with  forms  of 
unfair  competition,  which  investigation  had  shown 
to  have  been  resorted  to  for  the  purpose  of  con- 
trolling prices  and  suppressing  competition.  An 
examination  of  the  different  decrees  will  demon- 
strate that  the  decision  in  the  Tobacco  case  has 
been  put  into  practical  effect  and  that  the  Federal 


Results  of  Trust  Dissolution  Suits  175 

courts  are  exercising  in  equity  suits  under  the 
Sherman  Law,  a  power  to  restrain  which  is  co- 
extensive with  the  evils  against  which  it  was 
enacted.  That  statute  strikes  at  undue  restraints 
of  the  trade  and  commerce  of  the  United  States 
and  attempts  to  monopolize  it,  and  empowers  the 
courts  of  equity  of  the  United  States  to  make  such 
decrees  as  will  be  effective  to  prevent  and  restrain 
every  form  in  which  such  restraints  or  attempts 
to  monopolize  may  be  found  to  exist. 

The  first  tangible  result  of  these  dissolution  suits 
is  found  in  the  fact  that  no  new  combinations  or 
trusts,  such  as  the  Standard  Oil,  Tobacco,  Sugar, 
Steel,  Harvester,  or  the  like,  have  been  formed 
during  the  last  four  years.  So  long  as  the  statute 
remains  in  its  present  form,  none  will  be  formed, 
unless  the  law  department  of  the  national  govern- 
ment shall  cease  to  be  vigilant  in  the  enforcement 
of  the  law.  The  next  result  is,  that  it  has  become 
apparent  that  the  field  of  enterprise  is  open  to 
competition  if  any  choose  to  embark  in  it.  Only 
a  few  days  since,  the  formation  of  a  new  corpora- 
tion with  a  substantial  capital  was  announced  to 
engage  in  the  tobacco  business  in  competition  with 
the  companies  resulting  from  the  disintegration  of 
the  trust.  Since  the  disintegration  of  the  Tobacco 
trust,  all  of  the  stock  of  the  United  Cigar  Stores 
has  been  sold  to  persons  having  no  connection 
with  the  old  trust,  and  that  big  retail  corporation 
is  carrying  on  its  business  independently  of  the 
companies  with  which  it  was  formerly  affiliated. 


176  The  Changing  Order 

A  fight  for  the  control  of  the  company  between 
the  holders  of  a  majority  of  the  stock  of  the 
Waters-Pierce  Oil  Company,  to  whom  it  was  dis- 
tributed by  the  Standard  Oil  Company,  after  the 
Supreme  Court's  decision,  and  the  minority  holders, 
has  resulted  in  the  sale  of  that  majority  stock,  or  a 
large  part  of  it,  to  that  minority,  and  thereby  the 
elimination  of  Standard  Oil  interests  from  that 
corporation. 

The  regulation  of  rates  of  transportation  of  oil 
through  the  pipe  lines  owned  by  the  companies, 
which  were  controlled  by  the  Standard  Combina- 
tion by  means  of  the  enforcement  of  the  Hepburn 
Act  by  the  Interstate  Commerce  Commission,  also 
promises  to  remove  all  unfair  advantage  of  the 
large  refining  and  marketing  companies  over  the 
terms  and  conditions  of  transportation,  which 
constituted  so  potent  a  factor  in  building  up  the 
trust. 

But  the  criticism  is  made  that  these  suits  have 
not  resulted  in  reducing  the  price  of  commodities 
dealt  in;  and  it  is  argued  that  as  one  of  the  evils 
of  monopoly  is  the  control  of  prices,  the  fact  that 
prices  have  not  been  reduced  is  evidence  that  the 
monopoly  has  not  been  destroyed.  The  criticism 
is  a  superficial  one.  Scarcely  a  year  has  passed 
since  the  principal  dissolutions  took  place,  and  it 
can  hardly  be  expected  that  the  results  of  twenty 
years  of  successful  monopolization  can  be  undone 
in  less  than  one  year.  In  the  next  place,  the 
various  companies  among  which  the  business  of 


Results  of  Trust  Dissolution  Suits  177 

former  combinations  has  been  distributed  are  not 
likely  to  embark  on  a  sharp  price-cutting  com- 
petition unless  compelled  to.  The  prices  of  raw 
materials  have  been  distinctly  affected  by  the 
dissolution,  and  both  tobacco  leaf  and  crude  oil 
sell  at  much  higher  prices  since  the  unification  of 
substantially  all  the  buyers  has  been  removed, 
than  those  which  previously  prevailed.  There 
has  been  some  advance  in  the  price  of  a  few  pro- 
ducts of  petroleum,  such  as  gasoline,  due  to  the 
enormous  increase  in  demand  for  the  refined  article, 
and  the  increase  in  the  price  of  crude  oil.  There 
has  been  no  increase  in  the  price  of  tobacco  pro- 
ducts, but  there  is  an  enormously  increased 
competition  in  pushing  the  sale  of  different  brands 
of  tobacco  by  means  of  extensive  advertising. 

More  important  than  all  of  these,  the  unfair 
methods  of  competition  resorted  to  in  the  past 
have  been  checked  and  in  large  measure  destroyed, 
so  that  the  field  is  open  to  fair  competition  and 
enterprise  to  a  larger  degree,  I  believe,  than  for 
many  years  past.  Of  course,  this  has  its  dis- 
advantages as  well  as  its  advantages.  It  is  im- 
possible in  many  lines  of  industry  to  maintain  what 
the  producers  consider  to  be  satisfactory  prices, 
and  some  complaint  is  made  in  different  trades, 
because  the  producers  are  advised  that  they  cannot 
lawfully  get  together  and  agree  upon  and  main- 
tain prices  which  will  afford  them  a  satisfactory 
profit.  The  law  is  coming  to  be  understood  by  the 
community,  and  substantially  the  only  complaint 


178  The  Changing  Order 

heard  against  it  is  from  those  who  wish  through 
some  form  of  combination  or  agreement,  to  raise 
prices  or  restrict  competition.  When  the  pending 
suits  against  the  great  combinations  are  terminated, 
I  believe  no  abnormally  large  combinations  will  be 
left  intact,  and  the  businesses  and  property  now 
held  by  them  will  be  distributed  among  a  sufficient 
number  of  separate  and  distinct  companies  to 
remove  all  possible  fear  of  undue  influence  by 
them  over  the  business  of  the  country.  If  their 
future  activities  are  restricted  by  injunctive 
provisions  in  adequately  drawn  decrees,  and  the 
government  law  department  is  vigilant  in  seeing 
that  they  are  complied  with,  it  is  my  hope  that 
no  further  legislation  will  be  necessary  to  protect 
against  undue  restraints  of  interstate  commerce. 


XI 


FEDERAL  CONTROL  OF  STOCK  AND 
BOND  ISSUES  BY  INTER- 
STATE CARRIERS1 

IN  a  special  message  to  Congress  in  January,  19 10, 
the  President  recommended  the  enactment  of  a 
law  regulating  the  issue  of  stocks  and  bonds  by  rail- 
road companies  subject  to  the  Interstate  Commerce 
Act,  for  any  purpose  connected  with  or  relating  to 
any  part  of  its  business  governed  by  that  act. 
The  Republican  platform  of  1908  had  declared  in 
favor  of  such  legislation.  The  President  expressed 
his  opinion  that  it  would  be  plainly  within  the 
jurisdiction  of  Congress.  The  bills  for  the  amend- 
ment of  the  Interstate  Commerce  Act,  in  ac- 
cordance with  the  President's  recommendations, 
introduced  into  each  House  of  Congress,  contained 
provisions  prescribing  the  conditions  under  which 
stocks  and  bonds  should  be  issued.  The  necessity 
of  expressing  such  regulations  in  negative  and 
restrictive  form,  because  applied  to  corporations 
deriving  their  corporate  life  and  powers  from  State 

1  An  address  delivered  before  the  Illinois  State  Bar  Associa- 
tion, at  Chicago,  June  24,  1910. 

179 


180  The  Changing  Order 

laws,  resulted  in  complicated  provisions  not  easily 
understood  by  those  unfamiliar  with  the  subjects 
involved.  Partly  on  this  account,  partly  on  ac- 
count of  doubts  as  to  the  constitutionality  of 
such  legislation  entertained  by  most  Democrats 
and  by  some  Republicans,  the  provisions  dealing 
with  that  subject  were  dropped  from  the  bill,  but 
a  clause  was  inserted  authorizing  the  President  to 
appoint  a  Commission  to  investigate  "questions 
pertaining  to  the  issuance  of  stocks  and  bonds 
by  railroad  corporations  subject  to  the  provisions 
of  the  Act  to  Regulate  Commerce,  and  the  power 
of  Congress  to  regulate  the  same. " 

The  first  question  arising  in  the  consideration 
of  this  matter  will  be,  necessarily,  the  power  of 
Congress  to  legislate  in  the  premises,  and  it  has 
therefore  seemed  to  me  that  a  discussion  of  that 
subject  would  be  of  timely  interest. 

The  authority  of  Congress  over  the  issue  of  stocks 
and  bonds  by  State  railroad  corporations  engaged 
in  interstate  commerce  must  rest  upon  the  pro- 
visions of  Section  8  of  Article  I.  of  the  Constitution, 
granting  to  the  Congress  power — 

To  regulate  commerce  with  foreign  nations,  and 
among  the  several  States,  and  with  the  Indian  tribes, 
[and]   .    .    . 

To  make  all  laws  which  shall  be  necessary  and  proper 
for  carrying  into  execution  the  foregoing  powers.    .    .    . 

This  grant  vested  in  the  Congress  a  power  in  its 
nature  sovereign  and  exclusive  over  such  commerce, 


Federal  Control  of  Stocks  and  Bonds  181 

to  be  exercised  in  such  manner  as  Congress  in  its 
wisdom  should  deem  fit,  provided  the  means 
adopted  should  be  in  some  respect  appropriate  or 
adapted  to  carrying  into  execution  the  powers  so 
conferred.  But  the  relationship  between  the 
means  and  the  end  need  not  be  direct  and  im- 
mediate. * 

No  better  definition  of  this  power,  and  no  clearer 
statement  of  the  principles  governing  its  construc- 
tion and  exercise,  ever  has  been  formulated  than 
the  opinion  of  Alexander  Hamilton  on  the  con- 
stitutionality of  a  national  bank  law,  rendered 
February  23,  1791.  Thomas  Jefferson,  then  Sec- 
retary of  State,  and  Edmund  Randolph,  the  At- 
torney-General, had  united  in  advising  President 
Washington  that  Congress  was  without  power  to 
establish  a  national  bank,  their  objections  being 
founded  on  a  general  denial  of  the  authority  of  the 
United  States  to  erect  corporations.  But  Ham- 
ilton asserted  that  the  national  government  was 
empowered  to  create  corporations  whenever  the 
Congress  deemed  such  action  necessary  or  proper 
to  carry  out  more  effectually  any  power  conferred 
by  the  Constitution;  that  such  power  was  "in- 
herent in  the  very  definition  of  government,  and 
essential  to  every  step  of  the  progress  to  be  made 
by  that  of  the  United  States." 

Every  power  vested  in  a  government  [he  main- 
tained] is  in  its  nature  sovereign  and  includes  by  force 

'Legal  Tender  Cases,  12  Wall.,  457,  543. 


1 82  The  Changing  Order 

of  the  term  a  right  to  employ  all  the  means  requisite 
and  fairly  applicable  to  the  attainment  of  the  ends  of 
such  power  and  which  are  not  precluded  by  restrictions 
and  exceptions  specified  in  the  Constitution,  or  not 
immoral,  or  not  contrary  to  the  essential  ends  of 
political  society.   .    .    . 

The  circumstance  that  the  powers  of  sovereignty 
are  in  this  country  divided  between  the  National  and 
State  governments  does  not  afford  the  distinction 
which  makes  this  principle  inapplicable  to  the  United 
States. 

It  does  not  follow  from  this,  that  each  of  the  portion 
of  powers  delegated  to  the  one  or  to  the  other,  is  not 
sovereign  with  regard  to  its  proper  objects.  It  will  only 
follow  from  it,  that  each  has  sovereign  power  as  to 
certain  things,  and  not  as  to  other  things. 

He  held  the  power  to  erect  corporations  to  be 
unquestionably  incident  to  sovereign  power,  and 
consequently  to  that  of  the  United  States  "in 
relation  to  the  objects  entrusted  to  the  manage- 
ment of  the  Government." 

The  difference  is  this*  where  the  authority  of  the 
Government  is  general,  it  can  create  corporations  in 
all  cases;  where  it  is  confined  to  certain  branches  of 
legislation  it  can  create  corporations  only  in  those 
cases. 

The  only  question  to  be  considered  was  whether 
the  means  to  be  employed,  or  the  corporation  to  be 
erected,  has  any  natural  relation  to  any  acknowl- 
edged objects  or  lawful  ends  of  the  government. 


Federal  Control  of  Stocks  and  Bonds  183 

If  the  end  be  clearly  comprehended  within  any  of 
the  specified  powers,  and  if  the  measure  have  an  ob- 
vious relation  to  that  end,  and  is  not  forbidden  by  any 
particular  provision  of  the  Constitution,  it  may  safely 
be  deemed  to  come  within  the  compass  of  the  national 
authority. 

In  the  powers  to  collect  taxes,  to  borrow  money, 
to  regulate  trade  between  the  States,  and  to  raise 
and  maintain  fleets  and  armies,  he  found  ample 
basis  for  the  exercise  by  Congress  of  its  sovereign 
power  in  the  creation  of  a  banking  corporation 
for  the  purpose  of  aiding  in  the  exercise  of  those 
enumerated  powers. 

Based  upon  this  executive  interpretation,  Wash- 
ington approved  the  charter  of  the  first  United 
States  Bank.  Twenty-eight  years  later,  the  sound- 
ness of  the  proposition  asserted  by  the  great 
finance  minister  was  judicially  established  by  the 
Supreme  Court,  and  Chief  Justice  Marshall,  in 
expressing  the  unanimous  opinion  of  the  Court,1 
could  find  no  better  language  in  which  to  formu- 
late the  principles  of  the  decision,  than  a  paraphrase 
of  that  used  by  Hamilton. 

We  admit  [he  said],  as  all  must  admit,  that  the 
powers  of  the  Government  are  limited,  and  that  its 
limits  are  not  to  be  transcended.  But  we  think  the 
sound  construction  of  the  Constitution  must  allow 
to  the  national  legislature  that  discretion,  with  respect 
to  the  means  by  which  the  powers  it  confers  are  to  be 
carried  into  execution,  which  will  enable  that  body  to 

1  McCulloch  v.  State  of  Maryland,  4  Wheat.,  316. 


184  The  Changing  Order 

perform  the  high  duties  assigned  to  it,  in  the  manner 
most  beneficial  to  the  people.  Let  the  end  be  legiti- 
mate, let  it  be  within  the  scope  of  the  Constitution, 
and  all  means  which  are  appropriate,  which  are  plainly 
adapted  to  that  end,  which  are  not  prohibited,  but 
consist  with  the  letter  and  spirit  of  the  Constitution, 
are  constitutional.1 

The  Government  of  the  United  States  though 
limited  in  its  powers,  is  supreme,  and  its  laws,  when 
made  in  pursuance  of  the  Constitution,  form  the  su- 
preme law  of  the  land,  "  anything  in  the  constitution  or 
laws  of  any  State  to  the  contrary  notwithstanding."3 

He  admitted  that  among  the  enumerated  powers 
was  not  to  be  found  that  of  establishing  a  bank  or 
creating  a  corporation,  but  he  pointed  out  that 
among  the  enumerated  powers  of  government  were 

the  great  powers  to  lay  and  collect  taxes;  to  borrow 
money ;  to  regulate  commerce ;  to  declare  and  conduct 
a  war;  and  to  raise  and  support  armies  and  navies. 
The  sword  and  the  purse,  all  the  external  relations, 
and  no  inconsiderable  portion  of  the  industry  of  the 
nation,  are  intrusted  to  its  government.  It  can  never 
be  pretended  that  these  vast  powers  draw  after  them 
others  of  inferior  importance,  merely  because  they  are 
inferior.  Such  an  idea  can  never  be  advanced.  But 
it  may  with  great  reason  be  contended  that  a  govern- 
ment intrusted  with  such  ample  powers,  on  the  due 
execution  of  which*  the  happiness  and  prosperity  of  the 
nation  so  vitally  depends,  must  also  be  intrusted  with 
ample  means  for  their  execution.3 

1  McCulloch  v.  State  of  Maryland,  4  Wheat.,  241. 

»P.  406.  3  Pp.  407-8. 


Federal  Control  of  Stocks  and  Bonds  185 

In  Gibbons  v.  Ogden *  there  was  sharply  presented 
to  the  Court  a  consideration  of  the  nature  and 
extent  of  the  power  conferred  by  the  Constitution 
upon  the  Federal  Congress  "to  regulate  commerce 
with  foreign  nations,  and  among  the  several  States, 
and  with  the  Indian  tribes. " 

The  subject  to  be  regulated  is  commerce  [said  the 
Chief  Justice,  in  oft-quoted  language],  and  our  con- 
stitution being,  as  was  aptly  said  at  the  bar,  one  of 
enumeration,  and  not  of  definition,  to  ascertain  the 
extent  of  the  power,  it  becomes  necessary  to  settle  the 
meaning  of  the  word.  .  .  .  Commerce,  undoubt- 
edly, is  traffic,  but  it  is  something  more — it  is  inter- 
course. It  describes  the  commercial  intercourse 
between  nations  and  parts  of  nations  in  all  its  branches, 
and  is  regulated  by  prescribing  rules  for  carrying  on 
that  intercourse. 

Mr.  Justice  Johnson  somewhat  elaborated  this 
definition: — 

Commerce,  in  its  simplest  signification  means  an 
exchange  of  goods;  but  in  the  advancement  of  so- 
ciety, labor,  transportation,  intelligence,  care,  and 
various  mediums  of  exchange,  become  commodities, 
and  enter  into  commerce;  the  subject,  the  vehicle, 
the  agent  and  their  various  operations,  become  the 
objects  of  commercial  regulation.  Ship-building,  the 
carrying  trade,  and  propagation  of  seamen,  are  such 
vital  agents  of  commercial  prosperity  that  the  nation 
which  could  not  legislate  over  these  subjects,  would 
not  possess  power  to  regulate  commerce. 

1  9  Wheat.,  1. 


186  The  Changing  Order 

This  power  to  regulate,  the  Chief  Justice  pointed 
out,  was  the  power — 

to  prescribe  the  rule  by  which  commerce  is  to  be 
governed.  This  power,  like  all  others  vested  in 
Congress,  is  complete  in  itself,  may  be  exercised  to  its 
utmost  extent,  and  acknowledges  no  limitations,  other 
than  are  prescribed  in  the  constitution.  ...  If, 
as  has  always  been  understood,  the  sovereignty  of 
Congress,  though  limited  to  specified  objects,  is 
plenary  as  to  those  objects,  the  power  over  commerce 
with  foreign  nations,  and  among  the  several  states,  is 
vested  in  Congress  as  absolutely  as  it  would  be  in  a 
single  government,  having  in  its  constitution  the 
same  restrictions  on  the  exercise  of  the  power  as  are 
found  in  the  Constitution  of  the  United  States. 

In  passing  upon  the  constitutionality  of  the 
Employer's  Liability  Act  of  June  II,  1906  (32 
Stat.,  232),  Mr.  Justice  White  cited  this  definition 
of  Chief  Justice  Marshall's  as  one  which  is  and 
always  has  been  accepted  by  the  Supreme  Court; 
and  applied  it  to  sustain  the  proposition  that 
Congress,  under  the  grant  of  power  to  regulate 
commerce,  may  lawfully  regulate  the  relation  of 
master  and  servant  in  conducting  that  commerce. r 

"It  cannot  at  the  present  day  be  doubted," 
said  Justice  Bradley,  in  delivering  the  unanimous 
opinion  of  the  Court  in  California  v.  Pacific  Rail- 
road Co.,2  "that  Congress,  under  the  power  to 
regulate  commerce  among  the  several  States,  as 

1  The  Employer's  Liability  Cases,  207  U.  S.,  463. 
3 127  U.  S.,  1-127. 


Federal  Control  of  Stocks  and  Bonds  187 

well  as  to  provide  for  postal  accommodations  and 
military  exigencies,  had  authority  to  pass  these 
laws" — referring  to  the  Pacific  Railroad  Acts: 

The  power  to  construct,  or  to  authorize  individuals 
or  corporations  to  construct,  national  highways  and 
bridges  from  State  to  State,  is  essential  to  the  complete 
control  and  regulation  of  interstate  commerce.  With- 
out authority  in  Congress  to  establish  and  maintain 
such  highways  and  bridges,  it  would  be  without 
authority  to  regulate  one  of  the  most  important 
adjuncts  of  commerce.  This  power  in  former  times 
was  exerted  to  a  very  limited  extent,  the  Cumberland 
or  National  road  being  the  most  notable  instance. 
Its  exertion  was  but  little  called  for,  as  commerce  was 
then  mostly  conducted  by  water,  and  many  of  our 
statesmen  entertained  doubts  as  to  the  existence 
of  the  power  to  establish  ways  of  communication  by 
land.  But  since,  in  consequence  of  the  expansion 
of  the  country,  the  multiplication  of  its  products, 
and  the  invention  of  railroads  and  locomotion  by 
steam,  land  transportation  has  so  vastly  increased, 
a  sounder  consideration  of  the  subject  has  prevailed 
and  led  to  the  conclusion  that  Congress  has  plenary 
power  over  the  whole  subject. 

In  1887,  Congress  enacted  the  Interstate  Com- 
merce Act  by  which  it  required  rates  for  the  trans- 
portation of  freight  and  passengers  in  interstate 
commerce  to  be  just  and  reasonable,  forbade  un- 
just discrimination,  and  created  a  commission  to 
determine  when  any  rate  was  in  violation  of  this 
statutory  rule,  and  otherwise  to  exercise  a  certain 


1 88  The  Changing  Order 

control  over  interstate  carriers.  While  the  con- 
struction of  various  provisions  of  the  act  has  been 
submitted  to  the  courts  in  a  number  of  cases,  the 
constitutionality  of  the  act  has  never  been  seriously 
questioned. 

In  Mo.  Pacific  Ry.  Co.  v.  Kansas,1  the  Court 
quoted  from  the  opinion  in  Atlantic  Coast  Line  v. 
North  Carolina  Corporation  Commission,2  that — 

The  elementary  proposition  that  railroads  from  the 
public  nature  of  the  business  by  them  carried  on  and 
the  interest  which  the  public  have  in  their  operation 
are  subject,  as  to  their  State  business,  to  State  regula- 
tion, which  may  be  exerted  either  directly  by  the 
legislative  authority,  or  by  administrative  bodies  en- 
dowed with  the  power  to  that  end,  is  not  and  could 
not  be  successfully  questioned  in  view  of  the  long 
line  of  authorities  sustaining  that  doctrine, 

and  said, 

The  Coast  line  case  was  concerned  with  the  exertion 
of  State  power  over  a  matter  of  State  concern.  But 
the  same  doctrines  had  been  often  previously  ex- 
pounded in  reference  to  the  power  of  the  United  States 
in  dealing  with  a  matter  subject  to  the  control  of  that 
Government. 

In  Louisville  &  Nashville  R.  R.  v.  Kentucky3 
it  was  said : 

While  there  is  no  general  reservation  clause  in  the 
charter  of  the  L.  &  N.  Co.,  we  think  for  the  reasons 

1 216  U.  S.,  262.         a  206  U.  S.,  1.         * 161  U.  S.,  677. 


Federal  Control  of  Stocks  and  Bonds  189 

stated  in  the  Pear  sail  case  (161  U.  S.,  646),  that  under 
its  police  power  the  people,  in  their  sovereign  capacity, 
or  the  legislature,  as  their  representatives,  may  deal 
with  the  charter  of  a  railroad  corporation,  so  far  as 
is  necessary  for  the  protection  of  the  lives,  health  or 
safety  of  its  passengers  or  the  public,  or  for  the  security 
of  property  or  the  conservation  of  the  public  interests, 
provided,  of  course,  that  no  vested  rights  are  thereby 
impaired. 

When  the  subject  involved  affects  commerce 
among  the  States,  this  power  of  control  for  the 
public  good  is  vested  in  and  can  be  exercised  by 
Congress.  The  power  extends,  not  only  to  restric- 
tive, but  if  in  the  wisdom  of  Congress  it  seem 
necessary,  to  prohibitive  measures,  in  order  to  en- 
force the  rules  laid  down  by  Congress  respecting 
the  conduct  of  interstate  commerce. 

That  the  power  to  regulate  commerce  between 
the  States  involves  the  power  to  prohibit  such 
commerce  when  in  the  opinion  of  Congress  such 
prohibition  is  essential  to  the  public  welfare,  was 
recognized  and  established  by  the  Supreme  Court 
in  the  Lottery  Case.1  Having  asserted  that  the 
carrying  of  lottery  tickets  from  State  to  State 
constitutes  interstate  commerce,  and  that  the 
regulation  of  such  commerce  is  within  the  power 
of  Congress  under  the  Constitution,  the  Court, 
speaking  by  Mr.  Justice  Harlan,  asked: 

Are  we  prepared  to  say  that  a  provision  which  is, 
in  effect,  a  prohibition  of  the  carriage  of  such  articles 
1 188  U.  S.,  321. 


190  The  Changing  Order 

from  State  to  State  is  not  a  fit  or  appropriate  mode  for 
the  regulation  of  that  particular  kind  of  commerce? 

If  a  State,  when  considering  legislation  for  the 
suppression  of  lotteries  within  its  own  limits,  may 
properly  take  into  view  the  evils  that  inhere  in  the 
raising  of  money  in  that  mode,  why  may  not  Congress, 
invested  with  the  power  to  regulate  commerce  among 
the  several  States,  provide  that,  such  commerce  shall 
not  be  polluted  by  the  carrying  of  lottery  tickets  from 
one  State  to  another?  In  this  connection  it  must  not 
be  forgotten  that  the  power  of  Congress  to  regulate 
commerce  among  the  States  is  plenary,  is  complete  in 
itself,  and  is  subject  to  no  limitations  except  such  as 
may  be  found  in  the  Constitution.  What  provision 
in  that  instrument  can  be  regarded  as  limiting  the 
exercise  of  the  power  granted?  What  clause  can  be 
cited  which,  in  any  degree,  countenances  the  sugges- 
tion that  one  may,  of  right,  carry  or  cause  to  be  carried 
from  one  State  to  another  that  which  will  harm  the 
public  morals?  We  cannot  think  of  any  clause  of  that 
instrument  that  could  possibly  be  invoked  by  those 
who  assert  their  right  to  send  lottery  tickets  from  State 
to  State,  except  the  one  providing  that  no  person  shall 
be  deprived  of  his  liberty  without  due  process  of  law. 
.  .  .  [But]  it  will  not  be  said  to  be  a  part  of  any 
one's  liberty,  as  recognized  by  the  supreme  law  of  the 
land,  that  he  shall  be  allowed  to  introduce  into  com- 
merce among  the  States  an  element  that  will  be  con- 
fessedly injurious  to  the  public  morals. 

That  regulation  may  sometimes  appropriately 
take  the  form  of  prohibition,  the  Court  illustrated 
by  reference  to  the  acts  of  Congress  with  respect 


Federal  Control  of  Stocks  and  Bonds  191 

to  the  transportation  of  diseased  cattle  (Act  of 
May  29,  1884,  chapter  60) ;  the  provisions  of  the 
Sherman  Anti-Trust  Act  of  July  2,  1890;  and  the 
legislation  regarding  the  shipment  of  intoxicating 
liquors  among  the  States  (Act  of  August  9,  1890, 
26  Stat.,  chapters  313,  328).  The  Pure  Food  Law 
of  June  30,  1906,  is  a  later  example  of  the  same 
character  of  legislation. 

The  decision  in  the  Lottery  Case  was  followed 
in  Buttfield  v.  Stranahan1  which  affirmed  the 
constitutionality  of  the  Act  of  March  2,  1897  (29 
Stat.,  604),  for  the  prevention  of  the  importation 
of  impure  and  unwholesome  tea. 

In  the  Commodities  Clause  Cases2  the  Supreme 
Court  construed  the  provision  contained  in  the 
Hepburn  Act  of  June  29,  1906  (34  Stat.,  584) — 
commonly  called  the  commodities  clause — to 
mean  that  a  railway  company  was  thereby  pro- 
hibited from  moving  in  interstate  commerce 
commodities  owned  by  it,  or  in  which  it  had  a 
direct  interest,  and  from  transporting  commodities 
in  such  commerce  under  the  following  circum- 
stances and  conditions:  (a)  When  the  commodity 
has  been  manufactured,  mined,  or  produced  by  a 
railway  company  or  under  its  authority,  and  at  the 
time  of  transportation  the  railway  company  has 
not  in  good  faith,  before  the  act  of  transportation, 
parted  with  its  interest  in  such  commodity;  (b) 
when  the  railway  company  owns  the  commodity 
to  be  transported  in  whole  or  in  part;  (c)  when 

1 192  U.  S.,  470.  1 213  u.  S.,  366. 


192  The  Changing  Order 

the  railway  company  at  the  time  of  transportation 
has  an  interest  direct  or  indirect,  in  a  legal  sense, 
in  the  commodity — which  last  prohibition  does 
not  apply  to  commodities  manufactured,  mined, 
produced,  owned,  etc.,  by  a  corporation  in  which 
the  railway  company  is  merely  a  stockholder — 
and,  as  thus  construed,  declared  that  the  clause 
was  a  regulation  of  commerce  inherently  within 
the  power  of  Congress  to  enact.  Reference  was 
made  by  Mr.  Justice  White,  in  writing  the 
unanimous  opinion  of  the  Court,  to  the  case  of 
New  Haven  Railroad  v.  Interstate  Commerce 
Commission, *  in  which,  to  use  his  own  language : 

After  much  consideration,  it  was  held  that  the 
prohibitions  of  the  Interstate  Commerce  Act  as 
to  uniformity  of  rates  and  against  rebates,  operated 
to  prevent  a  carrier  engaged  in  interstate  commerce 
from  buying  and  selling  a  commodity  which  it  carried 
in  such  a  way  as  to  frustrate  the  provisions  of  the  act, 
even  if  the  effect  of  applying  the,  act  would  be  sub- 
stantially to  render  practically  impossible  the  buying 
and  selling  by  an  interstate  carrier  of  a  commodity 
transported  by  it. 

This  case  he  cited  as  an  authority  to  demonstrate 
that  the  statute,  as  construed  by  the  Court,  was 
inherently  within  the  power  of  Congress  to  enact  as 
a  regulation  of  commerce. 

We  do  not  say  this  [said  the  learned  Justice]  upon 
the  assumption  that  by  the  grant  of  power  to  regulate 

1 200  U.  S.,  361. 


Federal  Control  of  Stocks  and  Bonds  193 

commerce  the  authority  of  the  Government  of  the 
United  States  has  been  unduly  limited  on  the  one  hand 
and  inordinately  extended  on  the  other,  nor  do  we 
rest  it  upon  the  hypothesis  that  the  power  conferred 
embraces  the  right  to  absolutely  prohibit  the  move- 
ment between  the  States  of  lawful  commodities,  or 
to  destroy  the  governmental  power  of  the  States  as  to 
subjects  within  their  jurisdiction,  however  remotely 
and  indirectly  the  exercise  of  such  power  may  touch 
interstate  commerce.  On  the  contrary,  putting  these 
considerations  entirely  out  of  mind,  the  conclusion 
just  previously  stated  rests  upon  what  we  deem  to  be 
the  obvious  result  of  the  statute  as  we  have  interpreted 
it;  that  it  merely  and  unequivocally  is  confined  to  a 
regulation  which  Congress  had  the  power  to  adopt  and 
to  which  all  preexisting  rights  of  the  railroad  com- 
panies were  subordinated.1 

The  case  of  McCulloch  v.  Maryland2  settled  the 
power  of  Congress  to  create  a  corporation,  when- 
ever that  was  an  appropriate  means  to  carrying 
out  a  power  given  to  the  Congress  in  the  Consti- 
tution. In  the  exercise  of  the  power  to  regulate 
commerce  among  the  States,  Congress  passed 
acts  incorporating  the  Union  Pacific  Railway 
Company,  in  1862  (12  Stat.,  489);  the  Northern 
Pacific  Railroad  Company,  in  1864  (13  Stat.,  365) ; 
the  Atlantic  and  Pacific  Railway  Company,  in 
1866  (14  Stat.,  292);  and  the  Texas  Pacific  Rail- 
way Company,  in  1871  (16  Stat.,  473),  and  the 
Supreme  Court  held  all  of  these  acts  to  be  valid 

Siting  Armour  Packing  Co.  v.  United  States,  209  U.  S.,  56. 
•  4  Wheat.,  316. 
13 


194  The  Changing  Order 

and  constitutional  exercises  of  power. x  In  Luxton 
v.  North  River  Bridge  Co.,2  the  constitutionality 
of  an  act  of  Congress  incorporating  a  company  to 
build  a  bridge  across  a  navigable  river  between 
two  States  was  affirmed. 

Prior  to  the  sixties,  Congress  had  enacted  much 
more  legislation  concerning  commerce  by  water 
and  the  instruments  of  that  commerce  than 
respecting  commerce  by  land.  The  power  of 
Congress  over  water  commerce  is  no  greater  than 
that  over  land  commerce.  Both  depend  upon 
the  same  clause  in  the  Constitution: 

Up  to  a  recent  date  [said  Mr.  Justice  Brewer  in 
In  re  Debs3]  commerce,  both  interstate  and  inter- 
national, was  mainly  by  water,  and  it  is  not  strange 
that  both  the  legislation  of  Congress  and  the  cases  in 
the  Courts  have  been  principally  concerned  therewith. 
The  fact  that  in  recent  years  interstate  commerce  has 
come  mainly  to  be  carried  on  by  railroads  and  over 
artificial  highways  has  in  no  manner  narrowed 
the  scope  of  the  constitutional  provision,  or  abridged 
the  power  of  Congress  over  such  commerce.  On  the 
contrary,  the  same  fulness  of  control  exists  in  the  one 
case  as  in  the  other,  and  the  same  power  to  remove 
obstructions  from  the  one  as  from  the  other. 

1  See  Pacific  R.R.  removal  cases,  115  U.  S.,  2;  Ames  v.  Kan- 
sas, in  U.  S.,  449;  California  v.  Pacific  Railroad  Co.,  127  U.  S., 
1;  Reagan  v.  Mercantile  Trust  Co.,  154  U.  S.,  413;  Central 
Pacific  Railroad  Co.  v.  California,  162  U.  S.,  91;  United  States 
v.  Union  Pacific  R.R.  Co.,  160  U.  S.,  1;  United  States  v.  Union 
Pacific  R.R.  Co.,  98  U.  S.,  569. 
_  » 153  U.  S.,  525.  3 158  U.  S.,  564,  591. 


Federal  Control  of  Stocks  and  Bonds  195 

In  some  respects,  congressional  legislation  has 
dealt  far  more  minutely  with  the  subject  of  water 
commerce  than  with  that  by  railroad. 

The  navigation  laws  of  the  United  States  provide 
that  only  vessels  registered  pursuant  to  act  of 
Congress  shall  be  deemed  vessels  of  the  United 
States  and  entitled  to  the  benefits  and  privileges 
appertaining  to  such  vessels,  and  that  they  shall 
enjoy  such  benefits  and  privileges  only  so  long 
as  they  shall  continue  to  be  owned  by  a  citizen 
of  the  United  States  or  a  corporation  of  a  State, 
and  shall  be  commanded  by  a  citizen  of  the  United 
States  (U.  S.  R.  S.,  Sec.  413) :  That,  with  certain 
exceptions,  only  vessels  built  within  the  United 
States  and  belonging  wholly  to  citizens  thereof  may 
be  lawfully  registered  (R.  S.,  Sec.  4132) :  That  no 
bill  of  sale,  mortgage,  hypothecation,  or  conveyance 
of  any  vessel  or  part  of  a  vessel  of  the  United  States 
shall  be  valid  as  against  any  person  other  than  the 
grantor  or  mortgagor,  his  heirs  and  devisees  and 
persons  having  actual  notice  thereof,  unless  re- 
corded in  the  office  of  the  Collector  of  Customs 
where  such  vessel  is  enrolled  (R.  S.,  Sec.  492). 

By  Section  4283,  Revised  Statutes,  the  liability 
of  an  owner  of  any  vessel  for  loss,  injury,  or  de- 
struction of  property  shipped  in  it  is  limited  to  the 
amount  of  the  value  of  the  interest  of  such  owner 
in  the  vessel  and  her  freight.  The  constitution- 
ality of  this  enactment  was  upheld  by  the  Supreme 
Court, ■  even  as  applied  to  a  vessel  engaged  in  ply-? 

1  Lord  v.  Steamship  Co.,  102  U.  S.,  541. 


196  The  Changing  Order 

ing  on  the  Pacific  Ocean  between  two  ports  of  the 
State  of  California. 

It  seems  strange,  that  although  such  comprehen- 
sive control  over  interstate  and  foreign  commerce 
by  water,  including  the  regulation  of  the  agencies 
of  such  commerce,  the  citizenship  of  the  owners 
of  such  agencies,  the  method  of  transferring  and 
incumbering  such  ownership,  and  the  limit  of  the 
liability  of  the  owners,  had  been  exercised  by 
Congress  from  an  early  date,  yet  when  a  bill  was 
introduced  in  Congress  in  1864  to  declare  the  Rari- 
tan  Delaware  Bay  Railroad  of  New  Jersey  a  law- 
ful structure  and  a  military  and  post  road,  so  as 
to  enable  it  to  compete  for  through  traffic  between 
Philadelphia  and  New  York  with  the  Camden  & 
Amboy  Railway  monopoly,  it  was  defeated.  New 
Jersey  had  in  1832  granted  to  the  last-named  com- 
pany a  monopoly  in  railroad  construction  and  main- 
tenance through  that  State,  between  New  York 
and  Philadelphia,  as  complete  as  that  which  the 
State  of  New  York  had  granted  to  Robert  Fulton 
and  Robert  Livingston  in  steamboat  traffic  in  the 
waters  of  New  York,  which  had  been  declared 
contrary  to  the  Federal  Constitution  in  Gibbons 
v.  Ogden.  Yet  the  bill  in  favor  of  breaking  the 
monopoly  was  successfully  opposed  upon  the 
ground  that — 


there  is  no  warrant  in  the  Constitution  of  the  United 
States  that  will  allow  Congress  through  her  representa- 
tives from  other  states  of  this  Union  to  interfere  with 


Federal  Control  of  Stocks  and  Bonds  197 

the  local  railway  system  of  any  individual  State  which 
it  has  incorporated  merely  for  the  purpose  of  doing 
business  within  its  limits. 

Nor  were  there  wanting  members  of  Congress  to 
contend  that  railroad  transportation  did  not  fall 
under  the  term  "commerce."  The  same  opposi- 
tion was  successfully  made  to  an  effort  to  break 
the  Pennsylvania  Railroad  monopoly  during  the 
following  session,  and  not  until  June  15,  1866,  was 
the  bill  passed  which  gave  to  a  railroad  corporation 
of  one  State  the  right  to  carry  on  interstate  com- 
merce in  other  States.1  This  act  (14  Stats.,  66) 
is  brief  but  comprehensive: 

Whereas  the  Constitution  of  the  United  States  con- 
fers upon  Congress,  in  express  terms,  the  power  to 
regulate  commerce  among  the  several  States,  to  estab- 
lish post  roads,  and  to  raise  and  support  armies: 
Therefore : 

Be  it  enacted  by  the  Senate  and  House  of  Representa- 
tives of  the  United  States,  etc.,  That  every  railroad 
company  in  the  United  States,  whose  road  is  operated 
by  steam,  its  successors  and  assigns,  be,  and  is  hereby 
authorized  to  carry  upon  and  over  its  road,  boats, 
bridges,  and  ferries,  all  passengers,  troops,  govern- 
ment supplies,  mails,  freight,  and  property  on  their 
way  from  any  State  to  another  State,  and  to  receive 
compensation  therefor,  and  to  connect  with  roads  of 
other  States  so  as  to  form  continuous  lines  for  the 
transportation  of  the  same  to  the  place  of  destination. 

1  See  A  Congressional  History  of  Railways  in  the  United  States, 
by  Lewis  H.  Haney,  vol.  ii.,  pp.  214-230. 


198  The  Changing  Order 

This  law  (subsequently  carried  into  the  Revised 
Statutes  as  Section  5258)  has  been  followed  by  a 
large  number  of  acts  of  Congress  regulating  inter- 
state commerce  in  various  particulars.  Many  of 
those  statutes  are  enumerated  in  Mr.  Justice 
Brewer's  opinion  in  the  Debs  case,  *  and  all  opera- 
tion by  State  railroad  companies  as  agencies  of 
interstate  commerce  since  1866,  has  been  carried 
on  under  the  authority  granted  by  that  act,  and 
the  subsequent  acts  regulating  interstate  com- 
merce. Obviously,  as  Mr.  Justice  Brewer  said  in 
the  Debs  case: 

these  powers  given  to  the  national  government  over 
interstate  commerce  and  in  respect  to  the  transporta- 
tion of  the  mails  were  not  dormant  and  unused.  Con- 
gress had  taken  hold  of  these  two  matters,  and  by 
various  and  specific  acts  had  assumed  and  exercised 
the  powers  given  to  it,  and  was  in  the  full  discharge 
of  its  duty  to  regulate  interstate  commerce  and  carry 
the  mails.  The  validity  of  such  exercise  and  the 
exclusiveness  of  its  control  had  been  again  and  again 
presented  to  this  Court  for  consideration.  It  is 
curious  to  note  the  fact  that  in  a  large  proportion  of 
the  cases  in  respect  to  interstate  commerce  brought 
to  this  Court  the  question  presented  was  of  the  validity 
of  State  legislation  in  its  bearings  upon  interstate 
commerce,  and  the  uniform  course  of  decision  has  been 
to  declare  that  it  is  not  within  the  competency  of  a 
State  to  legislate  in  such  a  manner  as  to  obstruct 
interstate  commerce. 

1  In  re  Debs,  158  U.  S.,  564,  580. 


Federal  Control  of  Stocks  and  Bonds  199 

In  the  light  of  these  authorities,  it  would  seem 
clear  that  the  right  of  a  corporation — certainly 
of  a  railroad  corporation — of  one  State  to  carry  on 
business  in  interstate  commerce,  depends  upon  the 
will  of  Congress. 

It  is  contended  however  that  the  right  to  carry 
on  commerce  between  the  States  is  not  one  created 
by  the  Federal  Constitution,  but  a  right  which  the 
Constitution  found  in  existence  and  which  it  gave 
Congress  power  to  regulate.  This  is  perfectly  true 
as  to  individuals,  but  not  as  to  corporations. 
Until  Congress  legislated  on  the  subject,  the  States, 
under  the  rulings  of  the  Supreme  Court,  enjoyed 
in  unrestrained  right  to  legislate  regarding  the 
instrumentalities  of  commerce. 

For,  as  was  pointed  out  in  Louisville  &  Nash- 
ville Railroad  Co.  v.  Kentucky, "  while  the  police 
power  of  a  State  cannot  be  directly  exercised  by 
imposing  a  restriction  or  burden  upon  commerce 
itself,  this  is  not  true  with  respect  to  the  instru- 
ments of  such  commerce;  and  with  respect  to 
legislation  respecting  the  instrumentalities  of 
commerce  it  was  said  in  Chicago,  Milwaukee,  etc.» 
Railway  Co.  i>.  Solan2: 

So  long  as  Congress  has  not  legislated  upon  the 
particular  subject,  they  are  rather  to  be  regarded  as 
legislation  in  aid  of  such  commerce,  and  as  a  rightful 
exercise  of  the  police  power  of  the  State  to  regulate  the 
relative  rights  and  duties  of  all  persons  and  corpora- 
tions within  its  limits. 

1 161  U.  S.,  677.  ■  69  U.  S.,  133. 


200  The  Changing  Order 

In  Sherlock  et  al  v.  Ailing,1  Mr.  Justice  Field 
said: 

It  is  true  that  the  commercial  power  conferred 
by  the  Constitution  is  one  without  limitation.  It 
authorizes  legislation  with  respect  to  all  the  subjects 
of  foreign  and  inter-State  commerce,  the  persons  en- 
gaged in  it,  and  the  instruments  by  which  it  is  carried 
on.  And  legislation  has  largely  dealt,  so  far  as  com- 
merce by  water  is  concerned,  with  the  instruments  of 
that  commerce.  It  has  embraced  the  whole  subject 
of  navigation,  prescribed  what  shall  constitute 
American  vessels,  and  by  whom  they  shall  be  navi- 
gated; how  they  shall  be  registered  or  enrolled  and 
licensed;  to  what  tonnage,  hospital,  and  other  dues 
they  shall  be  subjected;  what  rules  they  shall  obey 
in  passing  each  other ;  and  what  provision  their  owners 
shall  make  for  the  health,  safety,  and  comfort  of  their 
crews.  Since  steam  has  been  applied  to  the  propulsion 
of  vessels,  legislation  has  embraced  an  infinite  variety 
of  further  details,  to  guard  against  accident  and 
consequent  loss  of  life. 

The  power  to  prescribe  these  and  similar  regulations 
necessarily  involves  the  right  to  declare  the  liability 
which  shall  follow  their  infraction.  Whatever,  there- 
fore, Congress  determines,  either  as  to  a  regulation 
or  the  liability  for  its  infringement,  is  exclusive  of 
State  authority.  But  with  reference  to  a  great  variety 
of  matters  touching  the  rights  and  liabilities  of  persons 
engaged  in  commerce,  either  as  owners  or  navigators 
of  vessels,  the  laws  of  Congress  are  silent,  and  the  laws 
of  the  State  govern. 

1 93  U.  S.,  99. 


Federal  Control  of  Stocks  and  Bonds  201 

It  is  recognized  and  implied  in  all  of  such  state- 
ments that  when  Congress  does  legislate  on  any 
of  these  incidental  subjects,  "touching  the  rights 
and  liabilities  of  persons  engaged  in  commerce" 
its  legislation  becomes  "the  supreme  law  of  the 
land,  anything  in  the  constitution  or  laws  of  any 
State  notwithstanding." 

So  in  Crutcher  v.  Kentucky, '  the  Supreme  Court 
held  an  act  of  the  Legislature  of  Kentucky  requir- 
ing the  agent  of  a  foreign  express  company  to 
take  out  a  license  on  certain  specified  conditions 
before  carrying  on  express  business  between  that 
State  and  others,  to  be  a  regulation  of  interstate 
commerce,  and  to  that  extent  repugnant  to  the 
Constitution. 

Congress  [said  Mr.  Justice  Bradley]  would  un- 
doubtedly have  the  right  to  exact  from  associations 
of  that  kind  any  guarantees  it  might  deem  necessary 
for  the  public  security,  and  for  the  faithful  transaction 
of  business;  and  as  it  is  within  the  province  of  Con- 
gress, it  is  to  be  presumed  that  Congress  has  done,  or 
will  do,  all  that  is  necessary  and  proper  in  that  regard. 

To  carry  on  interstate  commerce  is  not  a  franchise  or 
a  privilege  granted  by  the  State;  it  is  a  right  which 
every  citizen  of  the  United  States  is  entitled  to  exercise 
under  the  Constitution  and  laws  of  the  United  States; 
and  the  accession  of  mere  corporate  facilities,  as  a 
matter  of  convenience  in  carrying  on  their  business, 
cannot  have  the  effect  of  depriving  them  of  such  right, 

■  141  U.  S.,  47. 


202  The  Changing  Order 

unless  Congress  should  see  fit  to  interpose  some  con- 
trary regulation  on  the  subject. 

And  [he  adds]  it  has  frequently  been  laid  down  by 
this  Court  that  the  power  of  Congress  over  interstate 
commerce  is  as  absolute  as  it  is  over  foreign  com- 
merce. 

This  statement  of  the  law  is  cited  with  approval 
in  the  prevailing  opinion  of  the  Supreme  Court  in  the 
recent  cases  of  Western  Union  Telegraph  Co.  v. 
Kansas, r  and  International  Text-book  Co.  v.  Pigg.2 

The  right  of  a  corporation  organized  under  the 
laws  of  any  State  to  engage  in  interstate  commerce 
therefore  depends,  first,  upon  the  powers  given  to 
it  by  the  State  of  its  creation,  and  second,  upon 
the  will  of  Congress.  In  the  absence  of  any  expres- 
sion by  Congress  of  that  will,  it  may  conduct  its 
business  in  a  State  other  than  that  of  its  creation, 
in  accordance  with  the  comity  extended  to  foreign 
corporations  of  its  class  by  such  State,  either 
impliedly  or  by  express  legislation;  and  if  there 
be  such  legislation,  then  on  compliance  with  its 
requirements,  provided  such  requirements  do  not 
amount  to  creating  a  burden  upon  interstate 
commerce,  or  conflict  with  any  Federal  regulation 
of  interstate  commerce,  or  other  rights  secured  by 
the  Federal  Constitution. 

The  authorities  on  the  subject  of  the  right  of 
corporations  to  carry  on  business  outside  of  the 
State  creating  them,  without  interference  from 
State  authorities,  have  been  the  subject  of  too  much 

x2i6  U.  S.,  i,  19.  32i7  U.  S.,  91,  108. 


Federal  Control  of  Stocks  and  Bonds  203 

well-known  discussion  to  need  more  than  passing 
reference  here  to  the  decision  in  Bank  of  Augusta 
v.  Earle,1  and  the  very  recent  cases  of  Western 
Union  Telegraph  Co.  v.  Kansas, 2  Pullman  Car  Co. 
v.  Kansas,3  and  International  Text-book  Co.  v. 

Pigg.4 

In  Paul  v.  Virginia5  where  the  power  of  a  State 
to  exclude  foreign  insurance  companies  from  doing 
business  within  its  limits,  except  upon  conditions 
prescribed  by  it,  was  under  discussion,  the  Court 
said: 

It  is  undoubtedly  true,  as  stated  by  counsel,  that  the 
power  conferred  upon  Congress  to  regulate  commerce 
includes  as  well  commerce  carried  on  by  corporations 
as  commerce  carried  on  by  individuals. 

This  state  of  facts  forbids  the  supposition  that  it 
was  intended  in  the  grant  of  power  to  Congress  to 
exclude  from  its  control  the  commerce  of  corporations. 
The  language  of  the  grant  makes  no  reference  to  the 
instrumentalities  by  which  commerce  may  be  carried 
on;  it  is  general,  and  includes  alike  commerce  by 
individuals,  partnerships,  associations  and  corpora- 
tions. 

But  in  that  case  it  was  held  that  issuing  a  policy 
of  insurance  was  not  a  transaction  of  commerce, 
and  that  such  contracts  were  not  articles  of  com- 
merce in  the  proper  meaning  of  the  word,  although 

1 13  Peters,  519,  589.  32i6  U.  S.,  1. 

»2i6  U.  S.,  56.  4217  U.  S.,  91.        «8  Wall.,  168. 


204  The  Changing  Order 

the  parties  to  such  contracts  were  domiciled  in 
different  States.  These  paragraphs  from  the 
opinion  in  Paul  v.  Virginia  were  cited  with  ap- 
proval in  Western  Union  Telegraph  Co.  v.  Kansas. r 

The  control  of  Congress  being  therefore  sover- 
eign and  plenary  over  commerce  among  the  States, 
and  the  instrumentalities  of  such  commerce,  its 
power  to  create  national  corporations  to  conduct 
such  commerce  being  established,  its  right  to 
prohibit  such  commerce  when  essential  to  the 
public  welfare  being  adjudged,  even  to  the  extent 
of  forbidding  a  State  railroad  corporation  to  carry- 
in  interstate  commerce  a  commodity  in  which 
it  has  any  legal  interest,  direct  or  indirect,  al- 
though the  effect  of  such  prohibition  would  be 
substantially  to  render  buying  and  selling  by  an 
interstate  carrier  of  a  commodity  which  it  trans- 
ports practically  impossible;  how  can  it  be  doubted 
that  Congress  might  repeal  the  act  of  1866  and 
forbid  any  railroad  company  to  transport  goods 
in  interstate  commerce  unless  incorporated  by 
Congress? 

But  Congress  has  not  seen  fit  to  legislate  in 
that  way.  While  in  certain  cases  creating  cor- 
porations to  build  and  operate  railroads  and 
bridges,  it  has  in  general  specifically  empowered 
corporations  of  States  to  transport  passengers 
and  property  in  interstate  commerce  subject  to 
rules  and  regulations  which  it  has  from  time  to 
time  prescribed. 

'216  U.  S.,  134. 


Federal  Control  of  Stocks  and  Bonds  205 

In  Cherokee  Nation  v.  Kansas  Railway  Co.,1  it 
was  expressly  held  that  in  the  execution  of  the 
power  to  regulate  commerce,  Congress  may  employ 
as  instrumentalities  corporations  created  by  it  or 
by  the  States. 

Congress  had  granted  to  the  defendant  in  that 
case,  a  corporation  organized  under  the  laws  of 
Kansas,  the  right  to  construct  a  railroad  through 
the  Indian  territory.  Justice  Harlan,  writing  the 
opinion  of  the  Court,  said: 

It  is  true  that  the  company  authorized  to  construct 
and  maintain  is  a  corporation  created  by  the  laws  of  a 
State,  but  it  is  none  the  less  a  fit  instrumentality  to 
accomplish  the  public  objects  contemplated  by  the 
Act  of  1 884.  Other  means  might  have  been  employed, 
but  those  designated  in  that  act,  although  not  indis- 
pensably necessary  to  accomplish  the  end  in  view,  are 
appropriate  and  conducive  to  that  end,  and  therefore 
within  the  power  of  Congress  to  adopt.  The  question 
is  no  longer  an  open  one,  as  to  whether  a  railroad  is  a 
public  highway,  established  primarily  for  the  conven- 
ience of  the  people,  and  to  subserve  public  ends,  and, 
therefore,  subject  to  governmental  control  and  regula- 
tion. 

A  State  corporation  availing  of  the  powers  con- 
ferred by  acts  of  Congress  becomes  thereby  sub- 
ject, in  those  respects  in  which  Congress  has 
legislated,  to  all  the  conditions  and  limitations  im- 
posed by  Congress  on  the  exercise  of  those  pow- 

•  135  U.  S.,  641,  657. 


206  The  Changing  Order 

ers,  as  completely  as  though  they  were  written 
into  the  charter  of  such  corporation. 

This  was  made  clear  in  Hale  z>.  Henkel, x  where 
the  right  of  an  officer  or  employee  of  a  State 
corporation,  summoned  before  a  grand  jury  as 
a  witness,  to  refuse  to  produce  the  books  and  docu- 
ments of  such  corporation,  upon  the  ground  that 
they  would  tend  to  incriminate  the  corporation 
itself,  was  under  discussion.  The  Court  discrim- 
inated between  the  rights  of  the  witness,  as  an 
individual,  and  the  rights  of  the  corporation,  a 
mere  creature  of  the  State,  presumed  to  be  in- 
corporated for  the  benefit  of  the  public,  receiving 
certain  privileges  and  franchises  and  holding  them 
subject  to  the  laws  of  the  State  and  the  limitations 
of  its  charter;  and  held,  that  while  an  individual 
might  lawfully  refuse  to  answer  incriminating  ques- 
tions, unless  protected  by  a  statute,  it  did  not  follow 
that  a  corporation  vested  with  special  privileges 
and  franchises  could  refuse  to  show  its  hand  when 
charged  with  an  abuse  of  such  privileges.  So  far  as 
the  right  of  such  corporation  to  carry  on  interstate 
commerce  was  involved,  the  Court  treated  that  as 
a  franchise  derived  from  the  Federal  government 
which  entailed  a  corresponding  responsibility  to  it. 

Mr.  Justice  Brown,  writing  the  opinion  of  the 
Court,  said: 

It  is  true  that  the  corporation  in  this  case  was 
chartered  under  the  laws  of  New  Jersey,  and  that  it 

"  201  U.  S.,  43. 


Federal  Control  of  Stocks  and  Bonds  207 

receives  its  franchise  from  the  legislature  of  that  State; 
but  such  franchises,  so  far  as  they  involve  questions 
of  interstate  commerce,  must  also  be  exercised  in 
subordination  to  the  power  of  Congress  to  regulate 
such  commerce,  and  in  respect  to  this,  the  General 
Government  may  also  assert  a  sovereign  authority  to 
ascertain  whether  such  franchises  have  been  exercised 
in  a  lawful  manner,  with  a  due  regard  to  its  own  laws. 
Being  subject  to  this  dual  sovereignty,  the  General 
Government  possesses  the  same  right  to  see  that  its 
own  laws  are  respected  as  the  State  would  have  with 
respect  to  the  special  franchises  vested  in  it  by  the 
laws  of  the  State.  The  powers  of  the  General  Govern- 
ment in  this  particular  in  the  vindication  of  its  own  laws, 
are  the  same  as  if  the  corporation  had  been  created  by  an 
act  of  Congress. 

In  the  light  of  these  authorities,  it  may  be  confi- 
dently asserted  that  while  Congress  may  itself 
create  corporations  for  the  purpose  of  carrying 
on  interstate  commerce,  it  may  also  prescribe  rules 
and  regulations  under  which  a  corporation  created 
by  the  laws  of  a  State  may  conduct  such  commerce, 
and  that  when  it  does  so,  such  State  corporation 
may  only  engage  in  such  commerce  upon  conformity 
with  the  rules  and  regulations  so  laid  down  by 
Congress;  and  these  rules  may  have  reference, 
to  use  the  language  of  Justice  Johnson  in  Gibbons 
v.  Ogden,  not  only  to  the  exchange  of  goods  and 
commodities,  but  to  the  subject,  the  vehicle,  and 
the  agent  of  such  commerce,  and  their  various 
operations. 

Now,  economists  and  courts  alike  have  con- 


208  The  Changing  Order 

demned  the  reckless  issue  of  stock  and  bonds  by 
railroad  companies  without  adequate  considera- 
tion, which  has  come  to  be  generally  regarded  as 
an  evil,  certainly  as  demoralizing  in  its  effect  upon 
the  public  as  the  carriage  of  lottery  tickets  from 
one  State  to  another.  The  twenty  years  period  of 
railroad  receiverships  and  foreclosures,  the  records 
of  which  fill  many  volumes  of  reports  of  decisions 
of  the  Federal  courts,  testifies  eloquently  to  the 
practical  effect  of  such  unwarranted  issues  of  se- 
curities upon  the  ability  of  railroad  companies  to 
properly  perform  their  functions  as  instrumentali- 
ties of  interstate  commerce;  while  the  utterance 
of  stock  for  inadequate  or  fictitious  considera- 
tion, has  furnished  the  opportunity  for  the  most 
irresponsible  and  speculative  control  of  these 
highways  of  commerce,  and  has  resulted  in  the 
injury  which  always  follows  a  control  of  property 
by  those  who  have  no  real  investment  in  it.  Such 
control,  all  experience  demonstrates,  will  not 
generally  be  exercised  in  the  interest  of  the  road, 
and  in  such  manner  as  to  insure  the  safe,  conserva- 
tive management  necessary  to  meet  the  require- 
ments of  the  public  and  the  proper  discharge  of  the 
obligations  imposed  upon  the  carrier  by  law.  On 
the  contrary,  it  is  almost  inevitable  that  such  con- 
trol be  employed  for  purely  speculative  purposes 
and  to  secure  immediate  profit  to  those  in  tem- 
porary control.  It  is  this  public  aspect  which  lends 
force  to  the  conviction  that  "watered"  and 
"bonus  stock"  is  one  of  the  greatest  abuses  con- 


Federal  Control  of  Stocks  and  Bonds  209 

nected  with  the  management  of  corporations1; 
and  it  is  this  effect  upon  the  fitness  of  the  carriers 
to  perform  their  duties  under  national  legislation 
which  is  relied  upon  to  require  and  justify  Federal 
supervision  and  control  of  the  subject. 

Of  course,  the  Federal  government  cannot  con- 
fer upon  a  State  corporation  power  to  borrow 
money  and  issue  obligations  therefor,  nor  to 
create  and  issue  shares  of  stock.  Only  the  power 
which  erected  the  corporation  can  vest  it  with 
authority  for  those  purposes.  But  under  all  the 
rules  and  analogies,  to  which  reference  has  been 
made,  Congress  assuredly  may  regulate  and  re- 
strain the  State  corporation  in  the  exercise  of  these, 
as  well  as  of  other,  corporate  powers,  and  may 
prohibit  it  from  issuing  obligations  or  stock  for 
any  purpose  relating  to  interstate  or  foreign 
commerce,  except  in  accordance  with  rules  and 
restrictions  prescribed  by  it  for  the  purpose  of 
preventing  the  evils  above  referred  to.  In  that 
respect,  the  national  government,  having  adopted 
the  State  corporation  as  an  agency  of  interstate 
commerce,  may  subject  it  to  the  same  regulations 
with  respect  to  the  means  of  raising  money  for  the 
purpose  of  carrying  on  such  commerce,  as  it  could 
impose  upon  a  corporation  of  its  own  creation. 
The  end  is  legitimate,  viz.,  the  regulation  of 
interstate  commerce;  it  is  within  the  scope  of  the 
Constitution.     The  means  suggested  are  appro- 

1  Mitchell,  J.,  in  Hospes  v.  N.  W.  Mfg.  &  Car  Co.,  48  Minn., 
174,  196;  see  also  Handley  v.  Stutz,  139  U.  S.,  147-28. 


210  The  Changing  Order 

priate  to  correct  an  evil  which  has  had  in  the  past 
a  very  real  effect  upon  the  ability  of  these  instru- 
mentalities to  carry  on  commerce  among  the  States 
in  conformity  with  rules  and  regulations  constitu- 
tionally established  by  Congress;  and  the  means 
are  plainly  adapted  to  that  end.  On  reason,  and 
on  authority,  therefore,  such  legislation  is  within 
the  scope  of  the  constitutional  power  of  Congress. 

Again,  the  amount  of  stock  which  a  carrier  cor- 
poration may  issue,  and  the  extent  of  the  obligations 
which  it  may  incur,  have  a  direct  effect  upon  the 
determination  of  the  reasonableness  of  rates  of 
interstate  transportation. 

It  is  a  principle  of  the  common  law  that  a  com- 
mon carrier  must  charge  reasonable  rates  for  his 
services,  and  this  is  now  the  express  mandate  of 
the  Federal  statute  under  which  the  power  of 
fixing  the  maximum  rate  to  be  charged  is  devolved 
upon  the  Interstate  Commerce  Commission.  It 
is,  however,  well  settled  that  in  the  exercise  of  this 
power — as  in  the  exercise  of  similar  powers  con- 
ferred by  State  laws  upon  the  State  commissions — 
the  carrier  may  not  be  deprived  of  a  reasonable 
return  upon  its  invested  capital,  because  this 
would  be,  in  effect,  the  confiscation  of  private 
property  for  public  use ;  or,  in  case  of  State  action, 
would  tend  to  deprive  the  corporation — a  person 
within  the  meaning  of  the  Fourteenth  Amend- 
ment— of  property  without  due  process  of  law.1 

1  Railroad  Commission  cases,  116  U.  S.f  307;  Smyth  v.  Ames, 
169  U.  S.,  466,  522. 


Federal  Control  of  Stocks  and  Bonds  211 

In  Chicago,  Milwaukee,  &  St.  Paul  Railway 
Company  v.  Minnesota1  the  Court  said: 

If  the  company  is  deprived  of  the  power  of  charging 
reasonable  rates  for  the  use  of  its  property,  and  such 
deprivation  takes  place  in  the  absence  of  an  investiga- 
tion by  judicial  machinery,  it  is  deprived  of  the  lawful 
use  of  its  property,  and  thus,  in  substance  and  effect, 
of  the  property  itself,  without  due  process  of  law  and 
in  violation  of  the  Constitution  of  the  United  States; 
and  in  so  far  as  it  is  thus  deprived,  while  other  persons 
are  permitted  to  receive  reasonable  profits  upon  their 
invested  capital,  the  company  is  deprived  of  the  equal 
protection  of  the  laws. 

In  Reagan  v.  Farmers  Loan  &  Trust  Company, a 
which  involved  the  question  of  the  validity  of 
railroad  rates  established  by  the  State  Board  of 
Railroad  Commissioners  in  Texas,  the  Court,  in 
determining  the  question  whether  or  not  the  rates 
prescribed  were  so  unjust  and  unreasonable  as  to 
work  a  practical  destruction  to  rights  of  property 
of  the  company  affected  thereby,  entered  upon  an 
examination  of  the  amount  of  stocks  and  bonds 
of  the  company  outstanding  which  "were  issued 
for  and  represent  value."  As  a  result  of  such 
inquiry,  the  Court  found  that  the  rates  were  "not 
sufficient  to  enable  the  company  to  pay  all  the 
interest  on  the  bonds;"  that  the  bonds  and  stock 
outstanding  represented  money  invested  in  the 
construction  of  this  road; 

* 134  U.  S.,  418.  » 154  u.  S.,  362. 


212  The  Changing  Order 

that  the  owners  of  the  stock  have  never  received  a 
dollar's  worth  of  dividends  in  return  for  their  invest- 
ment. The  road  was  thrown  into  the  hands  of  a 
receiver  for  default  in  payment  of  the  interest  on  the 
bonds.  The  earnings  for  the  last  three  years  prior 
to  the  establishment  of  these  rates  were  insufficient 
to  pay  the  operating  expenses  and  the  interest  on  the 
bonds  .    .    . 

and  that  the  operation  of  the  tariff  sought  to  be 
enjoined  so  reduced  the  receipts  as  to  be  unjust  and 
unreasonable.  The  defendants  therefore  were  en- 
joined from  enforcing  the  rates  established  by  them. 
In  Smyth  v.  Ames1  the  Court  in  determining 
the  validity  of  rates  prescribed  by  the  Railroad 
Commission  of  the  State  of  Nebraska,  said: 

If  a  railroad  corporation  has  bonded  its  property 
for  an  amount  that  exceeds  its  fair  value,  or  if  its 
capitalization  is  largely  fictitious,  it  may  not  impose 
upon  the  public  the  burden  of  such  increased  rates 
as  may  be  required  for  the  purpose  of  realizing  profits 
upon  such  excessive  valuation  or  fictitious  capitaliza- 
tion; and  the  apparent  value  of  the  property  and 
franchises  used  by  the  corporation,  as  represented  by 
its  stocks,  bonds  and  obligations,  is  not  alone  to  be 
considered  when  determining  the  rates  that  may  be 
reasonably  charged. 

Again: 

We  hold,  however,  that  the  basis  of  all  calculations 
as  to  the  reasonableness  of  rates  to  be  charged  by  a 

1 169  U.  S.,  466. 


Federal  Control  of  Stocks  and  Bonds  213 

corporation  maintaining  a  highway  under  legislative 
sanction  must  be  the  fair  value  of  the  property  being 
used  by  it  for  the  convenience  of  the  public.  And  in 
order  to  ascertain  that  value,  the  original  cost  of 
construction,  the  amount  expended  in  permanent 
improvements,  the  amount  and  market  value  of  its 
bonds  and  stock,  the  present  as  compared  with  the 
original  cost  of  construction,  the  probable  earning 
capacity  of  the  property  under  particular  rates  pre- 
scribed by  statute,  and  the  sum  required  to  meet 
operating  expenses,  are  all  matters  for  consideration, 
and  are  to  be  given  such  weight  as  may  be  just  and 
right  in  each  case. 

This  necessarily  elaborate  and  tedious  inquiry 
concerning  the  consideration  for  outstanding  bonds 
and  stock,  which  is  always  a  subject  pressed  for 
consideration  in  such  cases,  would  be  entirely 
obviated,  and  the  work  of  the  Interstate  Commerce 
Commission  greatly  facilitated,  if  before  stock 
and  bonds  were  issued  the  consideration  were 
ascertained  by  the  Commission  to  be  full  and 
adequate. 

In  Knoxville  v.  Water  Company,1  in  determining 
the  validity  of  an  ordinance  of  a  city  fixing  the 
maximum  rates  to  be  charged  for  water  by  the 
defendant  company,  counsel  for  the  company 
urged  "rather  faintly,"  says  Justice  Moody  in 
writing  the  opinion,  that  the  capitalization  of  the 
company  ought  to  have  some  influence  in  the  case 
in  determining  the  value  of  the  property.     But  the 

«2I2U.  S.,  I. 


214  The  Changing  Order 

Court  said  that  it  was  a  sufficient  answer  to  the 
contention — 

that  the  capitalization  is  shown  to  be  considerably  in 
excess  of  any  valuation  testified  to  by  any  witness,  or 
which  can  be  arrived  at  by  any  process  of  reasoning. 
The  cause  for  the  large  variation  between  the  real 
value  of  the  property  and  the  capitalization  in  bonds 
and  preferred  common  stock  is  apparent  from  the 
testimony.  All,  or  substantially  all,  the  preferred 
and  common  stock  was  issued  to  contractors  for  the 
construction  of  the  plant,  and  the  nominal  amount 
of  the  stock  issued  was  greatly  in  excess  of  the  true 
value  of  the  property  furnished  by  the  contractors. 

The  fact  is,  that  while  the  amount  of  the  issued 
stock  and  bonds  is  not  controlling  upon  the  Court 
in  determining  the  effect  of  the  establishment  of 
rates  by  a  body  delegated  with  legislative  power 
over  the  subject,  yet  it  is  always  a  factor  of  greater 
or  less  importance,  and  is  always  the  subject  of 
inquiry  when  the  reasonableness  of  an  order  relat- 
ing to  rates  is  under  consideration. 

The  enactment  of  a  law  regulating  the  issue  of 
stocks  and  bonds  by  railroad  companies  is  not 
nearly  so  radical  a  step  as  was  the  enactment  of 
the  permissive  act  of  1866,  or  the  Interstate  Com- 
merce Act  of  1887.  It  certainly  goes  no  further 
than  the  acts  regulating  the  ownership  and  devo- 
lution of  interests  in  ships  employed  in  interstate  or 
foreign  commerce,  and  involves  no  principle  so 
new  and  startling  as  the  acts  regulating  the  hours 


Federal  Control  of  Stocks  and  Bonds  215 

of  labor  of  employees,  the  relations  between  the 
railroad  companies  and  their  employees,  or  of  the 
act  of  Congress  prohibiting  a  railroad  company 
to  carry  from  one  State  to  another  pursuant  to 
power  vested  in  it  by  the  State  of  its  creation,  a 
commodity  which  it  has  produced  and  owns. 

The  growing  strength  of  the  National  Government 
in  the  United  States  [says  Mr.  Bryce]  is  largely  due  to 
sentimental  forces  that  were  weak  a  century  ago,  and 
to  a  development  of  internal  communications  which 
was  then  undreamt  of. * 

In  the  debates  in  1865  over  the  bill  to  authorize 
the  Cleveland  and  Mahoning  Railroad  Co.,  an 
Ohio  corporation,  to  construct  its  railroad  from  the 
village  of  Youngstown,  Ohio,  to  and  into  the  State 
of  Pennsylvania  to  the  city  of  Pittsburg,  to  estab- 
lish it  as  a  military,  postal,  and  commercial  railway 
of  the  United  States,  and  to  guarantee  its  rights, 
Representative  Bland  argued  against  the  measure 
lest  it  should  prove  a  stepping-stone  to  the 
formation  of  great  congressional  corporations, 
strike  down  the  rights  of  the  States,  and  be  the 
entering  wedge  of  centralized  government.  Sim- 
ilar opposition  has  been  made  to  every  progressive 
measure  of  commerce  regulation.  But  the  cen- 
tralizing tendency  steadily  has  gone  on,  and  the 
control  of  Congress  over  interstate  railroad  com- 
panies has  been  exercised  in  an  increasingly 
comprehensive  manner.     Such  progress  is  insep- 

x  The  American  Commonwealth,  i.,  p.  358,  3d  ed. 


216  The  Changing  Order 

arable  from  growth.  The  great  arteries  of  com- 
munication between  different  parts  of  the  country 
and  the  instrumentalities  which  control  their 
operation  can  only  be  properly  regulated  in  the 
public  interest  by  the  central  national  power; 
a  power  which  is  sovereign,  which  is  exclusive 
when  exercised ;  and  which  should  be  exercised  to 
correct  every  evil  of  a  public  character  which 
experience  demonstrates  to  be  susceptible  of  cor- 
rection only  by  national  legislation. 


XII 

NEW  STATES  AND  CONSTITUTIONS1 

CURRENT  discussion  in  and  out  of  Congress 
concerning  the  admission  as  States  of  the 
Territories  of  Arizona  and  New  Mexico  has  taken 
a  wide  range,  and  has  involved  much  debate 
concerning  the  nature  and  effect  of  many  of  the 
provisions  contained  in  the  constitutions  proposed 
by  the  new  States  respectively,  not  only  as  applic- 
able to  them,  but  as  institutional  features  which 
may  be  applied  to  other  communities. 

That  a  frequent  recurrence  to  fundamental 
principles  is  necessary  to  preserve  the  blessings 
of  liberty  and  keep  government  free,  is  recognized 
and  declared  in  the  constitutions  of  more  than 
one  of  the  States. 2 

It  is  a  fortunate  circumstance,  therefore,  that 
the  nature  of  these  proposed  constitutions  should 
have  been   so  prominently  brought   before  the 

1  Address  before  the  Law  School  of  Yale  University,  June  19, 
1911. 

aSee,  e.  g.t  constitution  of  Vermont,  1777,  Chap.  I.,  par.  XVI.; 
Virginia  Bill  of  Rights,  1776,  Sec.  15;  New  Hampshire  consti- 
tution of  1792,  Parti.,  Art.  38;  Pennsylvania  constitution  of 
1776,  Declaration  of  Rights,  Sec.  XIV. 

217 


2i 8  The  Changing  Order 

people  as  to  provoke  discussion,  not  only  of  their 
provisions,  but  of  the  fundamental  principles 
upon  which  our  system  of  government  is  founded 
and  maintained,  and  of  the  nature  and  effect  upon 
them  of  the  conceptions  underlying  the  organiza- 
tion of  one  at  least  of  these  proposed  new  States, 
and  which,  to  a  certain  extent,  already  have  been 
adopted  in  some  of  the  admitted  States.  * 

While  a  free,  enterprising,  and  progressive  people 
will  not  reject  improvements  simply  because  they 
are  new  or  untried,  yet  thoughtful  Americans 
must  ever  consider  any  radical  changes  proposed 
in  their  government,  state  or  national,  in  the 
light  of  Washington's  warning  to  resist  with  care 
the  spirit  of  innovation  upon  the  principles  of  the 
institutions  established  by  the  Constitution  of  the 
United  States,  lest  alterations  in  the  forms  of  our 
fundamental  structures  of  government  "impair 
the  energy  of  the  system  and  undermine  what 
cannot  be  directly  overthrown." 

The  Constitution  of  the  United  States  estab- 
lished a  union  of  thirteen  States,  each  of  which  had 
been  separately  organized  under  a  government 
republican  in  form;  that  is  to  say,  a  government 
in  which  it  was  recognized  that  the  ultimate 
sovereignty  resided  in  the  adult  male  people — with 
some  exceptions,  differing  in  different  States,  de- 
pendent upon  color,  race,  condition  of  servitude, 
or  property  qualifications.     This  sovereignty  was 

1  Constitution  of  Michigan,  1909,  Art.  XVII;  Constitution  of 
Oklahoma,  Art  V.;  Oregon,  Laws  of  1903,  p.  244. 


New  States  and  Constitutions    219 

exercised  by  means  of  a  general  scheme  of  govern- 
ment under  which  (1)  a  constitution  or  funda- 
mental law  was  formulated  by  delegates  chosen 
from  among  the  qualified  voters,  in  some  cases 
empowered  to  ordain  and  establish  the  constitu- 
tion as  binding  upon  all  the  people,  and  in  others 
merely  to  submit  it,  when  formulated,  for  popular 
approval,  under  conditions  making  the  same  bind- 
ing upon  all,  if  affirmatively  approved  by  the  votes 
of  a  specified  percentage  of  the  qualified  male 
voters ;  and  (2)  within  the  limitations  prescribed  in 
such  constitutions,  laws  were  made  by  representa- 
tives periodically  chosen  for  such  purpose,  generally 
distributed  between  two  legislative  bodies  having 
different  tenures  and  qualifications;  all  laws  to  be 
executed  by  governors  and  other  executive  officials 
chosen  for  limited  periods  by  popular  vote,  or 
appointed  by  those  so  chosen ;  the  laws  to  be  inter- 
preted and  applied  by  judges,  generally  appointed 
to  hold  office  during  good  behavior,  but  subject 
to  removal  on  joint  address  of  both  branches  of  the 
legislature,  or  in  proceedings  for  impeachment. 

Differing  in  many  details,  the  governments  of 
all  the  thirteen  States  in  their  general  outlines  were 
conformable  to  the  foregoing  description,  and 
were  all  denominated  republican. 

The  Constitution  provided  in  Section  3  of  Article 
IV.: 


New  States  may  be  admitted  by  the  Congress  into 
this  Union;  but  no  new  States  shall  be  formed  or 


220  The  Changing  Order 

erected  within  the  jurisdiction  of  any  other  State; 
nor  any  State  be  formed  by  the  junction  of  two  or  more 
States,  or  parts  of  States,  without  the  consent  of  the 
Legislatures  of  the  States  concerned,  as  well  as  of  the 
Congress. 

By  Section  4: 

The  United  States  shall  guarantee  to  every  State 
in  this  Union  a  republican  form  of  government,  and 
shall  protect  each  of  them  against  invasion;  and  on 
application  of  the  Legislature,  or  of  the  Executive 
(when  the  Legislature  cannot  be  convened),  against 
domestic  violence. 

The  general  purpose  of  the  provisions  in  Section 
4  was  indicated  in  the  debate  over  them  in  the 
Constitutional  Convention.  Mr.  Randolph  said 
they  had  two  objects:  (1)  to  secure  republican 
government,  (2)  to  suppress  domestic  commotions. 
He  urged  the  necessity  of  both  these  provisions. 
Mr.  Madison  moved  to  substitute  "that  the 
Constitutional  authority  of  the  States  shall  be 
guaranteed  to  them  respectively  agst.  domestic 
as  well  as  foreign  violence."  But  other  delegates 
objected  to  this  as  perpetuating  the  existing  con- 
stitutions of  the  States,  some  of  which  Mr.  Houston 
thought  were  very  bad  and  ought  to  be  revised  and 
amended.  In  reply  to  a  suggestion  that  the 
States  should  be  left  to  suppress  their  own  rebel- 
lions, Mr.  Gorham  thought  it  would  be  very 
strange  were  a  rebellion  known  to  exist  and  the 
general  government  restrained  from  subduing  it. 


New  States  and  Constitutions     221 

At  this  rate  [he  said],  an  enterprising  Citizen  might 
erect  the  standard  of  Monarchy  in  a  particular  State, 
might  gather  together  partizans  from  all  quarters, 
might  extend  his  views  from  State  to  State,  and 
threaten  to  establish  a  tyranny  over  the  whole,  & 
the  Genl.  Govt,  be  compelled  to  remain  an  inactive 
witness  of  its  own  destruction.  With  regard  to 
different  parties  in  a  State  [he  humorously  added],  as 
long  as  they  confine  their  disputes  to  words  they  will 
be  harmless  to  the  Genl.  Govt.  &  to  each  other.1 

Chief  Justice  Taney,  in  delivering  the  opinion 
in  Luther  v.  Borden,2  said  that  under  the  above 
quoted  provision  of  the  Constitution — 

it  rests  with  Congress  to  decide  what  government  is 
the  established  one  in  a  State.  For  as  the  United 
States  guarantee  to  each  State  a  republican  govern- 
ment, Congress  must  necessarily  decide  what  govern- 
ment is  established  in  the  State  before  it  can  determine 
whether  it  is  republican  or  not.  And  when  the  sena- 
tors and  representatives  of  a  State  are  admitted 
into  the  councils  of  the  Union,  the  authority  of  the 
government  under  which  they  are  appointed,  as  well 
as  its  republican  character,  is  recognized  by  the  proper 
constitutional  authority.  And  its  decision  is  binding 
on  every  other  department  of  the  government,  and 
could  not  be  questioned  in  a  judicial  tribunal. 

"The  guaranty,"  said  Chief  Justice  Waite  in  a 
later  case3 — 

1  Records  of  the  Federal  Convention,  Farrand,  vol.  ii.,  p.  48. 

2  7  Howard,  1-42. 

3  Minor  v.  Happersett,  21  Wall.,  162,  175. 


222  The  Changing  Order 

is  of  a  republican  form  of  government.  No  particular 
government  is  designated  as  republican,  neither  is  the 
exact  form  to  be  guaranteed,  in  any  manner  especially 
designated.  Here,  as  in  other  parts  of  the  instrument, 
we  are  compelled  to  resort  elsewhere  to  ascertain 
what  was  intended. 

The  guaranty  necessarily  implies  a  duty  on  the  part 
of  the  States  themselves  to  provide  such  a  govern- 
ment. All  the  States  had  governments  when  the 
Constitution  was  adopted.  In  all,  the  people  partici- 
pated to  some  extent,  through  their  representatives, 
elected  in  the  manner  specially  provided.  These 
governments  the  Constitution  did  not  change.  They 
were  accepted  precisely  as  they  were,  and  it  is,  there- 
fore, to  be  presumed  that  they  were  such  as  it  was  the 
duty  of  the  States  to  provide.  Thus  we  have  unmistak- 
able evidence  of  what  was  republican  in  form,  within  the 
meaning  of  that  term  as  employed  in  the  Constitution. 

The  general  scheme  of  government  running 
through  the  constitutions  of  all  the  eleven  States 
which  had  adopted  constitutions  at  the  time  of  the 
adoption  of  the  Federal  Constitution,  the  salient 
outlines  of  which  have  been  indicated,  and  even 
that  embodied  in  or  established  under  the  char- 
ters of  Connecticut  and  Rhode  Island,  constituted 
the  American  system  of  republican  government 
which  Chief  Justice  Fuller  in  In  Re  Duncan1 
said  was  that  whose  distinguishing  feature — 

is  the  right  of  the  people  to  choose  their  own  officers 
for  governmental  administration  and  pass  their  own 

1 139  U.  S.,  449,  461. 


New  States  and  Constitutions    223 

laws  in  virtue  of  the  legislative  power  reposed  in 
representative  bodies,  whose  legitimate  acts  may  be 
said  to  be  those  of  the  people  themselves. 

The  nature  of  the  governments  established  in 
the  States  is  therefore  a  matter  of  necessary  con- 
cern to  Congress,  for  it  must  guarantee  to  each 
State  a  republican  form  of  government,  and  as 
the  national  government  must  also  protect  every 
State  against  domestic  violence,  common  prudence 
requires  a  careful  scrutiny  of  the  qualifications  of 
a  new  applicant  for  admission  to  the  family  of 
States,  in  order  to  determine  whether  or  not  its  elec- 
torate is  properly  qualified  to  maintain  stable  and 
peaceable  conditions  under  the  particular  form  of 
republican  government  which  it  proposes  to  adopt. 

The  Council  of  Safety,  meeting  at  Halifax, 
North  Carolina,  on  August  9,  1776,  recommended 
to  the  people  of  that  "now  Independent  State" 
the  election  of  delegates  to  represent  them  in 
Congress,  and  that  the  greatest  attention  be  paid 
to  such  election,  particularly  in  view  of  this  impor- 
tant consideration: 

That  it  will  be  the  Business  of  the  Delegates  then 
Chosen  not  only  to  make  Laws  for  the  good  govern- 
ment of,  but  also  to  form  a  constitution  for,  this 
State;  that  this  last,  as  it  is  the  Corner  Stone  of  all 
Law,  so  it  ought  to  be  fixed  and  Permanent,  and  that 
according  as  it  is  well  or  ill  Ordered,  it  must  tend  in 
the  first  degree  to  promote  the  happiness  or  Misery 
of  the  State.1 

1  Lobingier,  The  People's  Law,  p.  152. 


224  The  Changing  Order 

Among  the  principles  which  the  political  expe- 
rience of  the  colonists  had  supplied  was  "the idea 
of  a  constitution  superior  to  legislative  enact- 
ments, and  of  certain  natural  rights  secured  by 
such  a  constitution/*1 

"  Unquestionably/ '  says  Professor  George  El- 
liott Howard  in  his  introduction  to  Judge  Lobin- 
gier's  interesting  work  entitled  The  People's  Law, 
or  Popular  Participation  in  Law-Making, — "Un- 
questionably the  American  people  have  made  three 
great  contributions  to  the  political  organism  and 
to  political  science :  the  constitutional  convention, 
the  written  constitution,  and  constitutional  law. " 
He  further  points  out  that  while  each  of  these 
institutions  has  an  earlier  history  more  or  less 
distinct,  yet  that 

as  a  distinct  political  organ,  with  a  special  function  to 
perform — an  organ  to  be  compared  to  a  court,  an 
executive,  or  a  legislature — the  constitutional  con- 
vention was  born  and  developed  in  America.  As  a 
representative  body,  created  according  to  definite 
principles  to  discharge  a  single  special  function,  that 
of  enacting  organic  as  opposed  to  mere  statute  law, 
it  first  made  its  appearance,  fully  differentiated,  in 
the  Massachusetts  convention  of  1780  (the  type  of 
subsequent  state  constitutional  conventions)  and  in 
the  national  convention  of  1787.  Since  then  it  has 
gained  its  own  law  and  its  own  literature,  and  it  has 
taken  its  proper  place  in  the  Staatsrecht  of  the  world. 

1  Dodd,  The  Revision  and  Amendment  of  State  Constitutions, 
p.  2. 


New  States  and  Constitutions    225 

In  like  manner,  he  says,  while  in  English  and 
Colonial  history  there  were  forerunners  of  consti- 
tutions— 

Nevertheless,  the  written  constitution  as  an  actuality, 
as  a  recognized  and  permanent  form  of  organic  law,  is 
essentially  the  product  of  American  political  evolution. 

Hence  Professor  Stimson  says: 

The  Constitution  is  the  permanent  will  of  the 
people ;  a  law  is  but  the  temporary  act  of  their  repre- 
sentatives, who  have  only  such  power  as  the  people 
choose  to  give  them.1 

It  was  in  the  light  of  these  principles  that  the 
constitution  of  Massachusetts  was  framed  in  1780 
— that  constitution  which  has  been  described  as 
4 'the  most  perfect  expression  of  the  American  the- 
ory as  understood  at  the  close  of  the  Revolution,' ' 
and  which  has  not  only  remained  as  the  funda- 
mental law  of  the  great  Commonwealth  of  Massa- 
chusetts to  this  day,  but  which  has  also  served 
as  a  model  for  many  others.  It  has  called  forth 
the  highest  encomiums  from  even  the  advocates 
of  latter-day  democracy2  and  must  ever  remain 
a  monument  to  the  patriotism,  sagacity,  and  states- 
manship of  the  illustrious  men  who  framed  it. 

With  even  greater  patience,  skill,  and  foresight 
the  delegates  to  the  National  Convention  of  1787 
wrought  out  a  Constitution  for  the  union  of  States. 

1  The  American  Constitution  p.  7. 
a  See  Lobingier,  pp.  171,  177-9. 
15 


226  The  Changing  Order 

They  sought  to  construct  a  fundamental  law  for  the 
Union  with  the  same  view  to  permanence  and  stabil- 
ity as  that  with  which  the  Massachusetts  constitu- 
tion was  framed ;  in  order  to  secure  the  blessings  of 
liberty  and  good  government ,  not  only  to  themselves, 
but  to  their  posterity.     Justice  Story  said  of  it: 

The  constitution  unavoidably  deals  in  general  lan- 
guage. It  did  not  suit  the  purposes  of  the  people,  in 
framing  this  great  charter  of  our  liberties,  to  provide 
for  minute  specifications  of  its  powers,  or  to  declare 
the  means  by  which  those  powers  should  be  carried 
into  execution.  It  was  foreseen  that  this  would  be 
a  perilous  and  difficult,  if  not  an  impracticable,  task. 
The  instrument  was  not  intended  to  provide  merely 
for  the  exigencies  of  a  few  years,  but  was  to  endure 
through  a  long  lapse  of  ages,  the  events  of  which  were 
locked  up  in  the  inscrutable  purposes  of  Providence. 
It  could  not  be  foreseen,  what  new  changes  and 
modifications  of  power  might  be  indispensable  to 
effectuate  the  general  objects  of  the  charter;  and 
restrictions  and  specifications,  which,  at  the  present, 
might  seem  salutary,  might,  in  the  end,  prove  the 
overthrow  of  the  system  itself.  Hence,  its  powers 
are  expressed  in  general  terms,  leaving  to  the  legis- 
lature, from  time  to  time,  to  adopt  its  own  means  to 
effectuate  legitimate  objects,  and  to  mould  and  model 
the  exercise  of  its  powers,  as  its  own  wisdom,  and  the 
public  interests  should  require.  « 

In  providing  in  the  Constitution  for  the  admis- 
sion of  new  States,  it  was  specified  that  they  might 

1  Martin  v.  Hunter,  I  Wheat.,  304-26. 


New  States  and  Constitutions     227 

be  admitted  as  States  "into  this  Union."  There 
was  to  be  no  discrimination  between  them  and  the 
original  thirteen  States.  This  was  the  deliberate 
conclusion  of  the  Convention.  Various  proposi- 
tions looking  to  a  different  result  were  submitted. s 
Gouverneur  Morris  suggested  that  "the  rule  of 
representation  ought  to  be  so  fixed  as  to  secure  to 
the  Atlantic  States  a  prevalence  in  the  national 
councils. "  Elbridge  Gerry  expressed  a  like  view. 2 
It  was  proposed  by  another  to  apportion  represen- 
tation among  the  States  "upon  the  principles  of 
their  wealth  and  number  of  inhabitants."  But 
the  contrary  view  prevailed. 

What  Congress  understood  this  constitutional 
provision  to  mean,  was  shown  when  Vermont  and 
Kentucky,  the  first  two  States  to  be  admitted,  were, 
by  acts  of  Congress  passed  respectively  March  4, 
1 79 1,  and  June  1,  1792,  each,  "received  and 
admitted  into  this  Union  as  a  new  and  entire 
member  of  the  United  States  of  America.' ' 
Tennessee  was  admitted  in  1796  as  "one  of  the 
United  States  of  America,"  "on  an  equal  footing 
with  the  original  States  in  all  respects  whatso- 
ever;" and  substantially  the  same  language  was 
employed  with  respect  to  all  the  States  subse- 
quently admitted. 

It  is  the  almost  universal  judgment  of  our  people 
that  the  convention  decided  wisely  in  providing 
for  the  admission  of  States  without  discrimination 

1  Elliott's  Debates,  vol.  v.,  pp.  155-6, 128, 228. 
3  Ibid.,  pp.  279,  310. 


228  The  Changing  Order 

between  the  original  and  the  later  ones,  but  it  is 
interesting  to  note  in  passing  that  the  fundamental 
laws  for  the  creation  of  the  three  other  great 
federations  of  English-speaking  states — those  of 
British  North  America,  Australasia,  and  South 
Africa — all  contain  provisions  authorizing  the 
federal  parliament  to  admit  new  states  upon  such 
conditions  as  it  may  deem  expedient  to  impose,  and 
to  discriminate  as  between  the  original  members 
of  the  union  and  those  subsequently  admitted. ' 

No  uniformity  of  procedure  to  be  observed  in 
the  admission  of  States  was  established  by  the 
Constitution,  nor  has  resulted  from  common  prac- 
tice.   A  constitution  was  adopted  by  the  Legisla- 

1  Commonwealth  of  Australia  Constitution  Act,  July  9,  1900, 
Chap.  VI.— 

"121.  The  Parliament  may  admit  to  the  Commonwealth 
or  establish  new  States,  and  may  upon  such  admission  or 
establishment  make  or  impose  such  terms  and  conditions, 
including  the  extent  of  representation  in  either  House  of 
Parliament,  as  it  thinks  fit." 

Modern  Constitutions,  by  W.  F.  Dodd,  vol.  i.,  p.  65.  The 
Constitution  of  Australia,  by  W.  H.  Moore,  Melbourne,  1910. 

The  British  North  America  Act  (March  29,  1867),  Section 
146 — 

" .  .  .on  such  terms  and  conditions  in  each  case  as 
are  in  the  addresses  expressed  and  as  the  queen  thinks  fit  to 
approve,  subject  to  the  provisions  of  this  act." 

The  British  North  America  Act,  1871.  The  British  North 
America  Act,  1886.     Modern  Constitutions,  pp.  220,  221,  224. 

South  Africa  Act,  1909,  Sees.  149-150 —  "on  such  terms 
and  conditions  as  to  representation  and  otherwise  in  each  case 
as  are  expressed  in  the  addresses  and  approved  by  the  King. 
..."    Brand,  The  Union  of  South  Africa,  Oxford,  1909. 


New  States  and  Constitutions    229 

ture  of  Vermont  in  March,  1787,  which,  after 
reciting  that — 

it  is  absolutely  necessary,  for  the  welfare  and  safety 
of  the  inhabitants  of  this  State,  that  it  should  be 
henceforth  a  free  and  independent  State,  and  that  a 
just,  permanent,  and  proper  form  of  government 
should  exist  in  it,  derived  from  and  founded  on  the 
authority  of  the  people  only,  agreeable  to  the  direction 
of  the  honourable  American  Congress, 

declared  that — 

We,  the  Representatives  of  the  freemen  of  Vermont, 
in  General  Convention  met,  ...  do,  by  virtue  of 
authority  vested  in  us  by  our  constituents,  ordain, 
declare  and  establish  the  following  Declaration  of 
Rights  and  Frame  of  Government,  to  be  the  Constitu- 
tion of  this  Commonwealth,  and  to  remain  in  force 
therein  forever  unaltered,  except  in  such  articles  as 
shall  hereafter  on  experience  be  found  to  require 
improvement,  and  which  shall,  by  the  same  authority 
of  the  people,  fairly  delegated,  as  this  Frame  of 
Government  directs,  be  amended  or  improved,  for  the 
more  effectual  obtaining  and  securing  the  great  end 
and  design  of  all  government  hereinbefore  men- 
tioned.1 

The  act  of  Congress  approved  February  18, 
1 79 1,  merely  recites  that  the  State  of  Vermont  has 
petitioned  Congress  "to  be  admitted  a  member 
of  the  United  States,"  and  enacts  that  on 
March  4,  1791,  the  said  State  "be  received  and 

1  Thorpe's  American  Charters,  etc.,  vol.  vi.,  p.  3751. 


230  The  Changing  Order 

admitted  into  this  Union  as  a  new  and  entire 
member  of  the  United  States  of  America." 

The  act  admitting  Kentucky  into  the  Union, 
passed  February  4,  1791,1  recited  that  the  Com- 
monwealth of  Virginia  had  consented  that  the 
District  of  Kentucky,  within  its  jurisdiction, 
should  be  formed  into  a  new  State,  and  that  a  con- 
vention of  delegates,  chosen  by  the  people  of  the 
district,  had  petitioned  Congress  to  consent,  and 
it  was  thereupon  enacted  that  the  said  district 
be  formed  into  a  new  State,  separate  from  and 
independent  of  Virginia,  and  be  received  and 
admitted  into  the  Union  "as  a  new  and  entire 
member  of  the  United  States  of  America." 

The  act  of  June  1,  1796,  declared  that 

The  whole  of  the  territory  ceded  to  the  United 
States  by  the  State  of  North  Carolina  shall  be  one 
State,  and  the  same  is  hereby  declared  to  be  one  of  the 
United  States  of  America,  on  an  equal  footing  with  the 
original  States  in  all  respects  whatever,  by  the  name 
and  title  of  the  State  of  Tennessee.2 

A  constitution  had  been  adopted  for  that  State 
in  February,  1796,  but  no  reference  to  it  is  con- 
tained in  the  act  admitting  the  State  into  the 
Union. 

The  first  enabling  act  of  Congress,  or  act  specifi- 
cally authorizing  the  inhabitants  of  a  portion  of 
territory  to  form  for  themselves  a  constitution  and 
State  government  upon  which  to  be  admitted  into 

1  Poore,  Charters  and  Constitutions,  vol.  i.,  p.  647.  a  Id.  vol  ii., 
1676. 


New  States  and  Constitutions    231 

the  Union,  was  that  providing  for  the  admission 
of  the  State  of  Ohio,  approved  April  30,  1802. * 
It  authorized: 

All  male  citizens  of  the  United  States,  who  shall  have 
arrived  at  full  age,  and  resided  within  the  said  territory 
at  least  one  year  previous  to  the  day  of  election,  and  shall 
have  paid  a  territorial  or  county  tax,  and  all  persons  hav- 
ing in  other  respects  the  legal  qualifications  to  vote  for 
representatives  in  the  general  assembly  of  the  territory, 

to  choose  representatives  to  form  a  convention,  to 
first  determine  by  a  majority  of  the  whole  number 
elected  whether  it  be  expedient  to  form  a  constitu- 
tion and  State  government,  and  if  so,  by  ordinance 
to  provide  for  electing  representatives  to  form  a 
constitution  or  frame  of  government,  "provided 
the  same  shall  be  republican  and  not  repugnant 
to  "  the  Ordinance  for  the  government  of  the  North- 
western Territory.  The  convention  so  authorized 
met  and  framed  a  constitution,  which  was  not  sub- 
mitted to  the  people,2  but  Congress,  by  act  approved 
February  19,  1803,  declared  that  the  State  of  Ohio 
had  become  one  of  the  United  States  of  America. 3, 4 

1  Poore,  Charters  and  Constitutions,  vol.  ii.,  p.  1453.    a  Id.,  1455. 

3  Id.,  1464. 

4  The  Ordinance  of  1787  for  the  government  of  the  Northwest- 
ern Territory  provided  in  Article  V.  for  the  formation  of  States  and 
their  admission  into  the  Union,  and  that  whenever  any  of  said 
States  should  have  sixty  thousand  free  inhabitants  therein,  they 
should  be  at  liberty  to  form  a  permanent  constitution  and  State 
government,  "Provided,  the  Constitution  and  government  so  to 
be  formed  shall  be  republican,  and  in  conformity  to  the  principles 
contained  in  these  articles.   .    .    .  " 


232  The  Changing  Order 

The  first  effort  to  bind  a  new  State  to  terms  and 
conditions  other  than  those  to  which  it  would  be 
subject  in  like  manner  as  all  other  States  under 
and  by  force  of  the  provisions  in  the  Constitution 
of  the  United  States  was  expressed  in  the  Enabling 
Act  for  Louisiana,  passed  February  20,  181 1.1 

That  act  authorized 

all  free  white  male  citizens  of  the  United  States,  who 
shall  have  arrived  at  the  age  of  twenty-one  years, 
and  resided  within 

the  territory  described  in  the  act 

at  least  one  year  previous  to  the  day  of  election,  and 
shall  have  paid  a  territorial,  county,  district  or  parish 
tax :  and  all  persons  having  in  other  respects  the  legal 
qualifications  to  vote  for  representatives  in  the  general 
assembly  of  the  said  territory, 

to  choose  representatives  to  form  a  convention  to 
frame  a  constitution  and  State  government  for  the 
people  within  the  territory,  and  by  Section  3  that 
if  it  be  determined  to  be  expedient  so  to  do,  then 
the  convention  might 

in  like  manner  declare,  in  behalf  of  the  people  of  the 
said  territory,  that  it  adopts  the  constitution  of  the 
United  States;  whereupon  the  said  convention  shall 
be,  and  hereby  is,  authorized  to  form  a  constitution 
and  state  government,  for  the  people  of  the  said  terri- 
tory: Provided,  the  constitution  to  be  formed,  in 
virtue  of  the  authority  herein  given,  shall  be  republi- 

1 2  Stat.,  641. 


New  States  and  Constitutions     233 

can,  and  consistent  with  the  constitution  of  the  United 
States;  that  it  shall  contain  the  fundamental  prin- 
ciples of  civil  and  religious  liberty;  .  .  .   * 

besides  certain  other  specified  provisions. 

It  was  further  provided  that  if  such  constitution 
should  be  adopted  by  the  State,  it  should  be  trans- 
mitted to  Congress,  and  if  it  were  not  disapproved 
by  Congress  at  its  next  session  after  receipt  thereof, 
the  said  State  should  be  admitted  into  the  Union 
upon  the  same  footing  with  the  original  States. 
A  constitution  was  adopted  by  the  convention  in 
conformity  with  the  provisions  of  the  Enabling  Act, 
and,  on  April  8,  18 12,  Congress  passed  an  act 
reciting  compliance  with  the  previous  requirements 
and  declaring  that  the  said  State  was  admitted  into 
the  Union, 

on  an  equal  footing  with  the  original  states,  in  all 
respects  whatever,  by  the  name  and  title  of  the  State 
of  Louisiana :  Provided,  That  it  shall  be  taken  as  a  con- 
dition upon  which  the  said  state  is  incorporated  in  the 
Union,  that  .  .  .  all  .  .  .  conditions  and  terms 
contained  in  the  third  section  of  the  act,  the  title 
whereof  is  hereinbefore  recited,  shall  be  considered, 
deemed  and  taken,  fundamental  conditions  and  terms, 
upon  which  the  said  state  is  incorporated  in  the 
Union.2 

In  the  case  of  Permoli  v.  First  Municipality 3  it 
was  sought  to  have  it  adjudged  that  an  ordinance 
of  the  First  Municipality  of  the  City  of  New 

1 2  Stats,  at  L.,  642.  a  Id.,  703.  a  Howard,  588. 


234  The  Changing  Order 

Orleans  prohibiting  the  carrying  to  or  exposing  in 
any  of  the  Catholic  churches  of  that  municipality 
any  corpse,  or  the  celebration  by  any  priest  of  a 
funeral  at  such  churches,  and  requiring  all  funeral 
rites  to  be  performed  in  a  designated  obituary 
chapel,  was  void,  as  being  in  violation  of  the  pro- 
visions of  the  above-mentioned  Enabling  Act,  as 
well  as  of  the  act  admitting  the  State  into  the 
Union  upon  condition  that  its  constitution  should 
contain  the  fundamental  principles  of  civil  and 
religious  liberty.  But  the  Court  pointed  out  that 
the  Constitution  of  the  United  States  makes  no 
provision  for  protecting  the  citizens  of  the  respec- 
tive States  in  their  religious  liberties,  leaving  that 
subject  entirely  to  the  State  constitutions  and 
laws;  that  all  that  Congress  intended  by  the  Enab- 
ling Acts  was  to  declare  in  advance,  to  the  people 
of  the  territories,  the  basic  principles  their  con- 
stitutions should  contain: 


.  .  .  this  was  every  way  proper  under  the  circum- 
stances [said  Mr.  Justice  Catron];  the  instrument 
having  been  duly  formed  and  presented,  it  was  for  the 
national  legislature  to  judge  whether  it  contained 
the  proper  principles,  and  to  accept  it  if  it  did,  or 
reject  it  if  it  did  not.  Having  accepted  the  con- 
stitution and  admitted  the  state,  "on  an  equal  footing 
with  the  original  states  in  all  respects  whatever," 
in  express  terms,  by  the  act  of  1812,  Congress  was 
concluded  from  assuming  that  the  instructions  con- 
tained in  the  act  of  181 1  had  not  been  complied  with. 
No  fundamental  principles  could  be  added  by  way  of 


New  States  and  Constitutions     235 

amendment,  as  this  would  have  been  making  part  of 
the  state  constitution;  if  Congress  could  make  it  in 
part,  it  might,  in  the  form  of  amendment,  make  it 
entire.  The  conditions  and  terms  referred  to  in  the 
act  of  1 8 12,  could  only  relate  to  the  stipulations  con- 
tained in  the  second  proviso  of  the  act  of  181 1  involv- 
ing rights  of  property  and  navigation;  and  in  our 
opinion  were  not  otherwise  intended. 

A  similar  question  arose  in  the  case  of  Pollard's 
Lessee  v.  Hagan, x  where  it  was  held  that  a  declara- 
tion contained  in  the  compact  entered  into  between 
the  United  States  and  Alabama,  when  the  latter 
State  was  admitted  into  the  Union,  as  a  condition 
to  her  admission,  would  be  void  if  inconsistent 
with  the  Constitution  of  the  United  States. 

It  was  pointed  out  by  the  Court  that  all  con- 
stitutional laws  are  binding  on  the  people  in  the 
new  States  and  the  old  ones,  whether  they  consent 
to  be  bound  by  them  or  not. 

Every  constitutional  act  of  Congress  [said  Mr. 
Justice  McKinley]  is  passed  by  the  will  of  the  people 
of  the  United  States,  expressed  through  their  repre- 
sentatives, on  the  subject-matter  of  the  enactment; 
and  when  so  passed  it  becomes  the  supreme  law  of  the 
land,  and  operates  by  its  own  force  on  the  subject- 
matter  in  whatever  state  or  territory  it  may  happen 
to  be. 

Notwithstanding  these  decisions,  rendered  in 
1845,  and  the  very  clear  provisions  of  the  Con- 

1 3  How.,  212. 


236  The  Changing  Order 

stitution,  Congress  has  proceeded  in  many  sub- 
sequent acts  for  the  admission  of  new  States  to 
prescribe  terms  and  conditions  purporting  to  bind 
the  new  State,  which  conditions  the  new  State  was 
required  to  accept  by  ordinance  expressed  to  be 
"irrevocable  without  the  consent  of  the  people  of 
the  State  and  of  the  United  States."  Such  con- 
ditions were  imposed  with  respect  to  Missouri  in 
1821  (3  Stat.,  645),  Nebraska  in  1864  (13  Stat.,  47), 
Colorado  in  1875  (18  Stat.,  474),  North  Dakota, 
South  Dakota,  Montana,  and  Washington  in  1889 
(25  Stat.,  676),  Utah  in  1894  (28  Stat.,  107),  and 
Oklahoma  in  1906  (34  Stat.,  267). 

The  Enabling  Act  of  the  State  of  Oklahoma, 
passed  June  16,  1906  (34  Stat.  267),  provided 
that  the  constitution  to  be  adopted  for  the  new 
State 

shall  be  republican  in  form,  and  make  no  distinction 
in  civil  or  political  rights  on  account  of  race  or  color, 
and  shall  not  be  repugnant  to  the  Constitution  of  the 
United  States  and  the  principles  of  the  Declaration 
of  Independence. 

The  capital  of  the  State,  it  was  enacted,  shall 
be  temporarily  at  Guthrie,  and  shall  not  be 
changed  therefrom  previous  to  191 3,  but  shall 
after  that  year  be  located  by  the  electors  of  said 
State  at  an  election  to  be  provided  for  by  the 
Legislature. 

The  act  further  required  the  convention  to 
provide  in  the  constitution  so  to  be  adopted : 


New  States  and  Constitutions     237 

First.  That  perfect  toleration  of  religious  senti- 
ment shall  be  secured,  and  that  no  inhabitant  of  said 
State  shall  ever  be  molested  in  person  or  property 
on  account  of  his  or  her  mode  of  religious  worship, 
and  that  polygamous  or  plural  marriages  are  forever 
prohibited. 

Second.  That  the  manufacture,  sale,  barter,  giv- 
ing away,  or  otherwise  furnishing  .  .  .  intoxicat- 
ing liquors  within  those  parts  of  said  State,  now  known 
as  the  Indian  Territory  and  the  Osage  Indian  Reserva- 
tion, and  within  any  other  parts  of  said  State  which 
existed  as  Indian  reservations  .  .  .  [shall  be  pro- 
hibited.] 


Sixth.  That  said  State  shall  never  enact  any  law 
restricting  or  abridging  the  right  of  suffrage  on  account 
of  race,  color,  or  previous  condition  of  servitude. 

And  finally, 

That  the  constitutional  convention  provided  for 
herein  shall,  by  ordinance  irrevocable,  accept  the 
terms  and  conditions  of  this  Act. 

The  convention  was  held,  a  constitution  and  an 
"ordinance  irrevocable"  adopted,  and  thereupon 
Oklahoma  was  admitted  to  the  Union  by  pro- 
clamation of  President  Roosevelt,  November  16, 
1907.  Three  years  later,  on  December  29,  1910, 
its  Legislature  passed  an  act  providing  for  the 
removal  of  the  capital  from  Guthrie  to  Oklahoma 
City,  notwithstanding  its  covenant  with  the  United 
States  not  to  so  remove  prior  to  19 13.    Whatever 


238  The  Changing  Order 

might  be  said  of  the  ethics  of  this  act,  the  Supreme 
Court  of  the  United  States  in  the  very  recent  case 
of  Coyle  v.  Smith,  decided  May  29,  191 1,  '  held  that 
the  power  to  locate  its  own  seat  of  government  and 
to  determine  when  and  how  it  should  be  changed 
from  one  place  to  another  was  essentially  and 
peculiarly  a  State  power,  which  was  acquired  by 
Oklahoma  when  it  was  admitted  into  the  Union 
on  an  equality  with  the  other  States,  and  that 
Congress  might  not,  as  a  condition  to  the  admis- 
sion of  a  new  State,  constitutionally  restrict  its 
authority  or  impose  upon  it  any  limitations  not 
common  to  the  other  States  of  the  Union.  "It 
may  well  happen,"  said  Mr.  Justice  Lurton,  in 
delivering  the  opinion  of  the  Court, 

that  Congress  should  embrace  in  an  enactment  intro- 
ducing a  new  State  into  the  Union  legislation  intended 
as  a  regulation  of  commerce  among  the  States  or  with 
Indian  tribes  situated  within  the  limits  of  such  new 
State,  or  regulations  touching  the  sole  care  and  dis- 
position of  the  public  lands  or  reservations  therein, 
which  might  be  upheld  as  legislation  within  the  sphere 
of  the  plain  power  of  Congress.  But  in  every  such 
case  such  legislation  would  derive  its  force  not  from  any 
agreement  or  compact  with  the  proposed  new  State, 
nor  by  reason  of  its  acceptance  of  such  enactment  as  a 
term  of  admission,  but  solely  because  the  power  of 
Congress  extended  to  the  subject,  and,  therefore, 
would  not  operate  to  restrict  the  State's  legislative 
power  in  respect  of  any  matter  which  was  not  plainly 
within  the  regulating  power  of  Congress. 
1  221  U.  S.,  559. 


New  States  and  Constitutions     239 

An  interesting  variation  from  the  rules  observed 
with  respect  to  the  admission  of  all  other  States 
is  furnished  by  the  case  of  the  State  of  Utah. 
It  is  familiar  history  that  the  especial  problem 
with  which  the  national  government  had  to  grapple 
during  the  territorial  days  of  Utah,  was  the  institu- 
tion of  polygamy,  or  plural  marriages,  a  problem 
which  led  to  the  drastic  legislation  of  Congress 
repealing  the  charter  of  the  "Church  of  Jesus 
Christ  of  Latter  Day  Saints,"  commonly  known 
as  the  Mormon  Church,  the  appointment  of  a 
receiver  of  its  property  and  the  application  of  it 
on  principles  of  cy  pres — all  of  which  were  sustained 
by  the  Supreme  Court  of  the  United  States  in  the 
case  of  Mormon  Church  v.  United  States. x  When, 
therefore,  Congress  came  to  deal  with  the  estab- 
lishment of  a  government  for  Utah,  upon  its 
admission  as  a  State  into  the  Union,  it  provided 
for  the  formation  of  a  constitution  and  State 
government  for  the  proposed  State  which  should 
be  "republican  in  form  and  make  no  distinction 
in  civil  or  political  rights  on  account  of  race  or 
color,  except  as  to  Indians  not  taxed,  and  not  to  be 
repugnant  to  the  Constitution  of  the  United  States 
and  the  principles  of  the  Declaration  of  Independ- 
ence." The  Enabling  Act  further  required  the 
constitutional  convention  to  provide  by  ordinance, 
irrevocable  without  the  consent  of  the  United 
States,  and  the  people  of  said  State,  among  other 
things, 

1 136  U.  S.,  1. 


240  The  Changing  Order 

That  perfect  toleration  of  religious  sentiment  shall 
be  secured  and  that  no  inhabitant  of  said  State  shall 
ever  be  molested  in  person  or  property  on  account  of 
his  or  her  mode  of  religious  worship:  Provided,  That 
polygamous  or  plural  marriages  are  forever  prohibited. 

The  constitutional  convention  thereupon  framed 
and  the  people  adopted  a  constitution,  which  con- 
tained in  itself,  as  Article  3  thereof,  the  above- 
mentioned  required  provisions,  and  declared  that 
such  provisions  "shall  be  irrevocable  without  the 
consent  of  the  United  States  and  the  people  of 
this  State."  Nevertheless,  by  the  twenty-third 
article  of  the  constitution,  provision  was  made  for 
the  adoption  of  any  amendment  to  the  constitu- 
tion without  exception,  by  the  vote  of  two  thirds 
of  the  members  of  each  house  of  the  Legislature, 
and  of  a  majority  of  the  electors  of  the  State 
voting  thereon.  So  that  this  so-called  irrevocable 
ordinance  thus  stipulated  in  one  part  of  the  con- 
stitution to  be  beyond  change  without  the  con- 
sent of  the  United  States  and  the  people  of  the 
State,  under  the  subsequent  articles  may  be 
modified  or  repealed  at  any  time  by  the  vote  of  a 
majority  of  each  house  of  the  Legislature  of  the 
State,  confirmed  by  that  of  a  majority  of  the 
qualified  electors  voting  thereon.  Perfect  toler- 
ation of  religious  sentiment,  and  the  prohibition  of 
polygamous  or  plural  marriages,  sought  to  be 
accomplished  by  Congress,  therefore  rest  for  their 
continuance,  not  upon  any  binding  compact 
between  the  State  and  the  general  government, 


New  States  and  Constitutions    241 

but  solely  upon  the  continued  willingness  of  a 
majority  of  the  qualified  electors  of  the  State  to 
retain  such  provisions  as  a  part  of  its  fundamental 
law. 

It  is  well  to  keep  clearly  in  mind  the  precise 
conditions  under  which  new  States  are  admitted 
into  the  Union,  and  the  powers  and  privileges 
which  they  will  possess  after  such  admission,  in 
determining  whether  or  not  a  particular  applicant 
shall  be  received  into  full  fellowship  in  the  nation. 

Prior  to  the  admission  of  the  State  of  Oklahoma 
no  radical  departure  in  the  general  scheme  of 
State  government  from  the  recognized  common 
standard  was  proposed  by  the  constitution  of  any 
new  State.  Every  one  of  them,  judged'  by  the 
principles  above  referred  to,  and  tested  by  the 
general  schemes  embodied  in  the  constitutions  of 
the  original  States,  could  be  fairly  said  to  be 
republican  in  character,  and  to  contain  nothing 
inconsistent  with  the  principles  of  the  Federal 
Constitution.  Every  one  presented  a  government 
which  in  general  conformed  to  the  type  which 
has  become  recognized  as  the  American  representa- 
tive republican  form  of  government. 

The  constitution  of  Oklahoma  presented  new 
considerations,  and  was  the  occasion  of  much 
discussion  and  considerable  hesitation  over  its 
approval. 

The  special  census  of  Oklahoma  and  Indian 
Territory  which  were  combined  into  the  State 
of  Oklahoma,  taken  as  of  July  1,  1897,  showed  a 
16 


242  The  Changing  Order 

total  population  of  1,414,042.  Of  this  number, 
334,035  were  white  males  upwards  of  twenty-one 
years  of  age.  The  vote  on  the  adoption  of  the 
Constitution  was,  for  its  adoption,  180,333; 
against  it,  75,059;  total,  253,392.  The  total  vote 
was  therefore  upwards  of  seventy-five  per  cent, 
of  the  entire  number  of  adult  white  males,  and 
the  total  vote  on  the  constitution  was  nearly 
nineteen  per  cent,  of  the  entire  population.  It 
obviously  met  with  the  approval  of  the  general 
body  of  the  people  of  the  State.  By  proclamation 
dated  November  16,  1907,  President  Roosevelt 
declared  that — 

The  said  constitution  and  government  of  the  pro- 
posed State  of  Oklahoma  are  republican  in  form,  and 
that  the  said  constitution  makes  no  distinction  in  civil 
or  political  rights  on  account  of  race  or  color  and  is 
not  repugnant  to  the  Constitution  of  the  United  States 
or  to  the  principles  of  the  Declaration  of  Independence, 
and  that  it  contains  all  of  the  six  provisions  expressly 
required  by  Section  3  of  the  said  act  to  be  therein 
contained1    .     .     . 

and  declared  it  to  be  admitted  as  a  State  into  the 
Union. 

Mr.  Bryce,  in  The  American  Commonwealth , 
notes  that  the  chief  of  the  tendencies  revealed  by 
the  constitutions  of  the  last  forty  years  is  for  the 
constitutions  to  grow  longer.  This,  he  says,  is 
an   absolutely    universal   rule.2     Woodrow   Wil- 

*  35  Stat.,  Part  2,  p.  2 161.  »  Vol.  i„  p.  454  (3d  ed.). 


New  States  and  Constitutions     243 

son  says  in  his  work,  The  State:  "The  danger 
is  that  constitution  making  will  become  with  us 
only  a  cumbrous  mode  of  legislation."1  In  the 
constitution  of  Oklahoma  it  has  become  so. 
That  constitution  is  of  inordinate  length.  It  is 
divided  into  24  articles  and  312  sections,  and  it 
fills  70  closely  printed  octavo  pages.  A  large 
part  of  its  provisions  are  matters  which  may 
be  the  proper  subjects  of  legislation,  but  which 
have  no  place  in  the  fundamental  law,  tested  by 
established  American  standards.  While  providing 
for  a  bicameral  Legislature,  it  reserves  to  the  people 
powers  of  initiative  and  referendum  respecting  leg- 
islation. Eight  per  cent,  of  the  entire  number  of 
qualified  voters  are  given  the  right  to  propose  laws, 
and  fifteen  per  cent,  amendments  to  the  constitu- 
tion. The  referendum  of  any  law  passed  by  the 
Legislature  may  be  ordered  by  petition  signed  by 
five  per  cent,  of  the  qualified  voters.  Percentages 
are  to  be  based  on  the  total  number  of  votes  cast 
at  the  last  preceding  general  election  for  the  State 
officer  receiving  the  highest  number  of  votes  cast 
at  such  election.  A  measure  rejected  on  refer- 
endum cannot  again  be  proposed  within  three 
years,  except  on  petition  of  twenty-five  per  cent,  of 
the  qualified  voters.  The  constitution  may  be 
amended  in  any  particular,  if  agreed  to  by  a  major- 
ity of  the  members  elected  to  each  house,  and 
then  voted  for  by  a  majority  of  all  the  electors 
voting  upon  the  proposition.     But  it  is  provided 

1  Ed.  of  1899,  p.  475. 


244  The  Changing  Order 

that  no  convention  shall  be  called  by  the  Legisla- 
ture to  propose  alterations,  revisions,  or  amend- 
ments to  the  constitution,  or  to  propose  a  new 
constitution,  unless  the  law  for  it  be  first  approved 
by  the  people,  on  a  referendum  vote.  The  question 
of  such  proposed  convention  must  be  submitted  to 
the  people  at  least  once  in  twenty  years.  These 
provisions,  however,  are  not  to  impair  the  right  of 
the  people  to  amend  by  vote  on  an  intitiative 
proposition. 

The  Oklahoma  Enabling  Act  also  provided  for 
submitting  to  the  people  of  the  Territories  of 
Arizona  and  New  Mexico  the  question  whether  or 
not  they  should  become  one  State,  and,  if  so,  then 
for  a  convention  to  frame  a  constitution  for  such 
State  and  to  provide  for  its  admission  into  the 
Union.  A  vote  was  had  on  this  proposition  and 
the  decision  was  in  the  negative. 

Subsequently,  on  June  20,  1910,  an  act  was 
passed  providing  for  the  admission  of  the  Terri- 
tories as  separate  States.1  This  act  authorized 
the  election  of  delegates  in  each  Territory  to  a 
convention  empowered  to  form  a  constitution  and 
provide  a  government  for  the  proposed  State,  which 
constitution  "shall  be  republican  in  form  and 
make  no  distinction  in  civil  or  political  rights  on 
account  of  race  or  color,  and  shall  not  be  repugnant 
to  the  Constitution  of  the  United  States  and  the 
principles  of  the  Declaration  of  Independence." 

The  convention  was  further  required  to  provide 

1 36  Stats.,  557. 


New  States  and  Constitutions     245 

"by  an  ordinance  irrevocable  without  the  consent 
of  the  United  States  and  the  people  of  said  State — " 
a  number  of  provisions.  The  constitution,  when 
formed,  was  to  be  submitted  for  the  approval  of  the 
qualified  voters  of  the  Territory  at  a  convention 
to  be  held  to  consider  the  same,  and 

when  said  constitution  and  such  provisions  thereof  as 
have  been  separately  submitted  shall  have  been  duly 
ratified  by  the  people  of  New  Mexico  as  aforesaid  a 
certified  copy  of  the  same  shall  be  submitted  to  the 
President  of  the  United  States  and  to  Congress  for 
approval,  together  with  a  statement  of  the  votes  cast 
thereon  and  upon  any  provisions  thereof  which  were 
separately  submitted  to  and  voted  upon  by  the  people. 
And  if  Congress  and  the  President  approve  said  con- 
stitution and  the  said  separate  provisions  thereof,  or, 
if  the  President  approves  the  same  and  Congress  fails 
to  disapprove  the  same  during  the  next  regular  session 
thereof,  then  and  in  that  event  the  President  shall 
certify  said  facts  to  the  Governor  of  New  Mexico,  who 
shall,  within  thirty  days  after  the  receipt  of  said 
notification  from  the  President  of  the  United  States, 
issue  his  proclamation  for  the  election  of  the  state  and 
county  officers,  etc. 

A  similar  provision  was  made  as  to  Arizona. 

When  the  result  of  the  election  should  be  cer- 
tified to  the  President,  he  was  required  imme- 
diately to  issue  his  proclamation  announcing  the 
result  of  said  election  so  ascertained. 

And  upon  the  issuance  of  said  proclamation  by  the 
President  of  the  United  States,  the  proposed  state  of 


246  The  Changing  Order 

New  Mexico  shall  be  deemed  admitted  by  Congress 
into  the  Union,  by  virtue  of  this  Act,  on  an  equal  foot- 
ing with  the  other  States — s 

and  in  like  manner  as  to  Arizona. 

There  has  been  some  discussion  as  to  the  precise 
function  of  the  President  under  these  provisions, 
and  the  criteria  governing  his  action  in  approving 
or  disapproving  the  constitution  to  be  submitted 
pursuant  thereto.  It  is  quite  clear  that  Congress 
may  not  delegate  to  the  President  its  power  to 
determine  whether  or  not  a  State  shall  be  ad- 
mitted into  the  Union.  Article  4,  Section  4,  of 
the  Constitution  declares  "New  States  may  be 
admitted  by  the  Congress  into  this  Union.' '  But 
that  Congress  may  exercise  a  legislative  power 
to  take  effect  upon  the  ascertainment  by  the 
President  of  a  specified  fact,  is  well  established. 
In  such  case  the  President  is  not  exercising  a 
delegated  legislative  power,  but  is  the  mere  agent 
of  the  law-making  department  to  ascertain  and 
declare  the  event  upon  which  its  expressed  will  is 
to  take  effect.2  While  therefore  Congress  may 
not  empower  the  President  to  admit  a  Territory  as 
a  State  whenever  it  shall  present  to  him  a  con- 
stitution which  meets  with  his  individual  approval, 
it  may  provide  for  the  admission  of  a  State  when- 
ever it  shall  adopt  a  constitution  which  shall  be 
republican  in  form,  and  make  no  distinction  in 

1 36  Stat.,  561. 

2  See  Field  v.  Clark,  143  U.  S.,  649,  692;  Buttfield  v.  Stranahan, 
192  U.  S.,  470,  476. 


New  States  and  Constitutions    247 

civil  or  political  rights  on  account  of  race  or  color, 
and  shall  not  be  repugnant  to  the  Constitution  of 
the  United  States  and  the  principles  of  the  Declar- 
ation of  Independence ;  and  empower  the  President 
to  ascertain  and  determine  whether  a  particular 
constitution  meets  that  description.  If,  therefore, 
the  President  should  act  pursuant  to  the  provisions 
of  the  above-mentioned  act,  it  would  be  presumably 
upon  the  ascertainment  that  the  constitution 
presented  met  the  requirements  specified  by 
Congress;  no  other  consideration  being  submitted 
for  his  determination.  But  Congress  is  not  bound 
to  approve  the  constitution  and  admit  a  State,  even 
though  it  do  conform  with  the  conditions  specified 
in  the  Enabling  Act .  Congress  may ,  because  of  the 
general  nature  of  the  institutions  provided  in  the 
proposed  constitution;  because  of  the  conditions 
under  which  the  constitution  was  adopted ;  because 
of  the  character  or  number  of  the  electorate  upon 
whose  vote  it  was  adopted ;  or  because  of  any  other 
reason  which  it  may  deem  sufficient,  or  without  any 
reason,  reject  a  proposed  constitution  in  toto,  or 
require  it  to  be  modified  in  any  given  particular 
as  a  condition  to  admitting  the  State. 

To  be  sure,  except  in  so  far  as  it  might  conflict 
with  some  provision  of  the  Federal  Constitution, 
the  new  State  might  immediately  after  its  admis- 
sion into  the  Union  amend  its  constitution  or 
adopt  a  new  one, x  and  Congress  would  be  powerless 

1  As  Arizona  did  with  respect  to  provisions  for  the  recall  of 
judges,  after  the  admission  to  statehood. 


248  The  Changing  Order 

to  prevent.  Its  only  protection  against  such  an 
act  would  be  to  require  it  to  embody  provisions  so 
regulating  the  means  of  amendment  as  to  ensure 
against  hasty  or  ill-considered  changes.  Thus, 
e.  g.y  it  might  require  the  constitution  to  provide 
that  it  should  only  be  amended  with  the  consent 
of  at  least  a  majority  of  all  the  qualified  voters  of 
the  State. 

The  constitution  of  New  Mexico  was  adopted 
by  the  convention  and  submitted  to  the  people  of 
that  Territory.  The  returns  of  the  Thirteenth 
Census  gave  New  Mexico,  in  19 10,  a  total  popula- 
tion of  327,301,  of  which  76,233  were  native-born 
males  over  twenty-one  years  of  age,  and  4269 
naturalized  foreign-born  males  over  twenty-one 
years  of  age,  making  an  apparent  total  voting 
population  of  80,502.  There  were  cast  for  the 
constitution  31,742  votes;  against  it  13,399  votes, 
or  a  total  of  45,141  on  the  question  of  its  adoption, 
— being  about  fifty-six  per  cent,  of  the  total 
number  of  the  qualified  voters,  and  slightly  less 
than  fourteen  per  cent,  of  the  total  population. 

The  constitution  so  adopted,  while  exhibiting 
the  tendency  to  undue  length  and  minutiae  above 
noted,  yet  compares  favorably  in  that  respect  with 
the  constitution  of  Oklahoma.  It  contains  22 
articles  divided  into  257  sections,  and  fills  38  ordi- 
nary printed  octavo  pages. 

Legislative  power  is  vested  in  a  Legislature 
divided  into  two  chambers  and  there  is  a  provision 
reserving  to  the  people  the  power  to  disapprove, 


New  States  and  Constitutions    249 

suspend,  and  annul  any  law  enacted  by  the  Legis- 
lature except  appropriation  and  health  laws,  etc. 
This  right  must  be  exercised  by  petition  signed 
by  not  less  than  ten  per  cent,  of  the  qualified 
electors  in  each  of  three  fourths  of  the  counties, 
and  in  the  aggregate  by  not  less  than  ten  per  cent. 
of  the  qualified  electors  of  the  State,  as  shown  by 
the  total  number  of  votes  cast  at  the  last  preceding 
general  election.  The  question  of  the  approval 
or  rejection  of  such  laws  must  be  submitted  to  the 
electorate  at  the  next  general  election;  and  if  a 
majority  of  the  legal  votes  cast  thereon,  and  not 
less  than  forty  per  cent,  of  the  total  number  of  such 
votes,  be  cast  at  such  general  election  for  the  rejec- 
tion of  such  law,  it  shall  be  annulled  and  thereby 
repealed,  with  the  same  effect  as  if  the  Legislature 
had  then  repealed  it.  If  such  petitions  be  signed 
by  not  less  than  twenty-five  per  cent,  of  the 
qualified  electors  under  each  of  the  foregoing 
conditions,  and  filed  with  the  secretary  of  state 
within  ninety  days  after  the  adjournment  of  the 
session  of  the  Legislature  at  which  the  law  was 
enacted,  the  operation  of  the  law  shall  be  thereby 
suspended  and  the  question  of  its  approval  or 
rejection  shall  be  likewise  submitted  to  a  general 
vote  at  the  next  ensuing  general  election.  If  a 
majority  of  the  votes  cast  thereon,  being  not  less 
than  forty  per  cent,  of  the  total  number  of  votes 
cast  at  such  general  election  be  cast  for  the  rejec- 
tion of  such  law,  it  shall  be  thereby  annulled; 
otherwise  it  shall  go  into  effect.     In  the  matter  of 


250  The  Changing  Order 

amending  the  constitution,  there  is  a  marked 
reaction  towards  earlier  standards.  The  framers 
of  this  proposed  constitution  evidently  propose 
that  any  changes  in  it  shall  be  supported  by 
an  active  public  demand.  They  have  therefore 
provided  that  the  constitution  may  be  amended 
by  the  vote  of  two  thirds  of  all  members  elected 
to  each  of  the  two  houses  of  the  Legislature,  vot- 
ing separately,  and  submitted  to  the  electors  of 
the  State  for  their  approval  or  rejection.  But  the 
proposal  must  be  ratified  by  a  majority  of  the 
electors  voting  thereon  and  by  an  affirmative  vote 
equal  to  at  least  forty  per  cent,  of  all  the  votes  cast 
at  said  election  in  the  State  in  at  least  one  half 
of  the  counties  thereof.  In  that  event,  and  not 
otherwise,  such  amendment  shall  become  a  part 
of  the  constitution.  Not  more  than  three  amend- 
ments may  be  submitted  at  one  election,  and  if 
two  or  more  amendments  are  proposed  they  shall 
be  so  submitted  as  to  enable  the  electors  to  vote 
on  each  of  them  separately.  Provision  is  also 
made  for  a  constitutional  convention  to  revise  or 
amend  the  constitution,  at  any  time  within  twenty- 
five  years  by  three  fourths  vote  of  the  members 
elected  to  each  house,  at  any  time  after  twenty- 
five  years  by  two  thirds  votes  of  the  members  of 
each  house;  and  that  in  either  event  the  question 
of  calling  a  convention  shall  be  submitted  to  the 
electors  at  the  next  general  election.  If  a  majority 
of  the  electors  voting  at  such  election  in  the  State, 
and  in  at  least  one  half  of  the  counties  thereof, 


New  States  and  Constitutions    251 

shall  vote  in  favor  of  calling  a  convention,  the 
Legislature  shall  at  the  next  session  provide  by  law 
for  calling  the  same.  The  compact  with  the 
United  States  required  by  the  Enabling  Act  is 
embodied  in  the  twenty -first  article  of  the  constitu- 
tion, which  is  declared  to  be  irrevocable  without 
consent  of  the  United  States  and  the  people  of 
the  State ;  and  that  no  change  or  abrogation  of  its 
provisions  in  whole  or  in  part  shall  be  made  by  any 
constitutional  amendment  without  the  consent  of 
Congress. 

This  constitution  has  received  the  formal 
approval  of  the  President  and  is  now  before  the 
Congress. x 

In  very  marked  contrast  with  the  constitution 
of  New  Mexico,  both  as  to  the  number  of  votes  cast 
for  its  adoption,  the  percentage  of  the  whole 
population  voting  with  respect  to  it,  and  the 
provisions  of  the  constitution  itself,  is  the  con- 
stitution of  Arizona,  which  was  adopted  by  the 
people  of  that  Territory  on  February  9 , 1 9 1 1 .  The 
returns  of  the  Thirteenth  Census  give  Arizona 
in  1910  a  total  population  of  204,354,  of  which  155,- 

1  By  joint  resolution  of  Congress  approved  Aug.  21,  191 1,  the 
admission  of  New  Mexico  and  Arizona  respectively  was  provided 
for,  conditioned  upon  the  modification  in  specified  particulars  of 
the  tentative  constitutions  theretofore  adopted  by  them  (37 
Stats,  at  L.,  39),  and  by  proclamations  dated  respectively  Jan. 
6,  1912,  and  Feb.  14,  1912,  President  Taft  declared  that  these 
conditions  had  been  complied  with,  and  that  New  Mexico  and 
Arizona  respectively  were  admitted  into  the  Union  on  the  same 
footing  as  the  other  States  (37  Stats,  at  L.,  vol.  ii.,  pp.  1723, 
1728). 


252  The  Changing  Order 

550  are  native  born,  and  48,804  foreign  born.  Of 
this  population,  118,576  are  males,  and  85,778  are 
females.  The  total  number  of  white  males  over 
twenty-one  years  of  age  is  65,133,  of  which  number 
39,427  are  native  born  and  5896  naturalized 
citizens,  so  that  the  total  voting  population  is, 
apparently,  45,323.  There  were  cast  for  the 
constitution  12,187  votes,  against  it  3822  votes, 
or  a  total  of  16,009  on  the  question  of  its  adoption, 
being  about  thirty -five  per  cent,  of  the  total  number 
of  qualified  voters,  and  slightly  less  than  eight 
per  cent,  of  the  total  population.  The  vote  for 
the  constitution  was  by  less  than  twenty-seven 
per  cent,  of  the  voting  population,  and  about  six 
per  cent,  of  the  total  population. 

Congress  may  well  consider  whether  or  not  a 
Territory  in  which  only  thirty-five  per  cent,  of  the 
qualified  electors  exhibit  sufficient  interest  to  vote 
upon  the  adoption  of  the  fundamental  law  on 
which  it  seeks  admission  to  the  Union,  gives  evi- 
dence of  that  capacity  for  self-government  which 
is  so  essential  to  the  maintenance  of  free  institutions. 

The  constitution  thus  adopted  by  the  vote  of  this 
small  percentage  of  the  people  of  Arizona  contains 
provisions  without  precedent  in  any  constitution 
ever  submitted  to  Congress  for  approval  by  an 
applicant  for  admission  to  statehood.  While  declar- 
ing generally  that  the  powers  of  the  government 
shall  be  divided  into  three  separate  departments, 
the  legislative,  the  executive,  and  the  judicial, 
and  vesting  the  legislative  authority  in  a  Legisla- 


New  States  and  Constitutions     253 

ture  consisting  of  a  senate  and  house  of  repre- 
sentatives, provision  is  made  for  the  exercise  of 
legislative  power  by  small  percentages  of  the 
qualified  electors.  Under  the  power  to  initiate 
legislation,  ten  per  cent,  of  the  qualified  electors 
are  authorized  to  propose  any  measure,  and 
fifteen  per  cent,  to  propose  any  amendment  to  the 
constitution.  Under  the  referendum  power,  five 
per  cent,  of  the  qualified  electors  may  order  the 
submission  to  the  people  at  the  polls  of  any  meas- 
ure, or  of  any  item,  section,  or  part  of  any  measure 
enacted  by  the  Legislature,  except  public  health 
laws,  etc.;  and  no  act  passed  by  the  Legislature 
shall  become  operative  for  ninety  days  after  the 
close  of  its  session,  in  order  to  allow  opportunity 
for  referendum  petitions  to  be  filed.  Any  measure 
referred  to  a  vote  of  the  qualified  electors  under 
the  initiative  or  referendum  shall  become  a  law 
when  approved  by  a  simple  majority  of  the  votes 
cast  thereon;  and  the  veto  power  of  the  governor 
shall  not  extend  to  initiative  or  referendum 
measures  approved  by  a  majority  of  the  qualified 
voters.  The  total  number  of  all  votes  cast  for  all 
candidates  for  governor  at  the  last  preceding 
general  election,  is  made  the  basis  on  which  the 
number  of  qualified  electors  required  to  sign  the 
petition  shall  be  computed.  These  rights  of  ini- 
tiative and  referendum  are  also  reserved  to  the 
qualified  electors  of  every  incorporated  city,  town, 
and  county,  as  to  all  local,  city,  town,  or  county 
matters  on  which  such  incorporated  cities,  towns, 


254  The  Changing  Order 

or  counties  shall  be  empowered  by  general  laws 
to  legislate.  Under  the  power  of  the  initiative, 
fifteen  per  cent,  of  the  qualified  electors  may  pro- 
pose measures  on  such  matters,  and  ten  per  cent, 
may  propose  the  referendum  on  legislation  enacted 
by  or  within  such  city,  town,  or  county.  If  two 
or  more  conflicting  measures  or  amendments  to  the 
constitution  shall  be  approved  by  the  people  at 
the  same  election,  the  measure  or  amendment 
receiving  the  highest  number  of  votes  shall  prevail 
in  all  particulars  as  to  which  there  is  conflict. 

It  will  be  observed  that  there  is  no  requirement 
respecting  the  minimum  number  of  votes  which 
must  be  cast,  in  order  that  an  act  of  the  legislature 
may  be  overruled,  or  a  law  directly  enacted  upon 
the  initiative,  or  the  constitution  amended  in  any 
particular.  All  that  is  required  is  that  the  measure 
shall  be  proposed,  or  the  machinery  set  in  motion 
by  the  above-mentioned  small  percentages  of 
the  qualified  electors  who  voted  for  governor  at  the 
previous  election,  and  then,  if  a  majority  of  the 
votes  cast  at  the  popular  election  is  in  favor  of 
the  proposed  action  or  measure,  it  becomes  effective, 
no  matter  how  small  a  proportion  of  the  total 
electorate  of  the  State  may  be  the  vote,  and  with- 
out the  slightest  regard  to  its  territorial  distribu- 
tion. Thus,  if  we  should  assume  that  the  total  of 
the  vote  cast  for  all  candidates  for  governor  at  the 
last  preceding  election  was  that  cast  upon  the 
proposition  to  adopt  this  proposed  constitution, 
viz.,  16,009,  then  the  constitution  could  be  amended 


New  States  and  Constitutions    255 

on  the  proposal  of  fifteen  per  cent,  of  that  number, 
or  2402  votes — that  is  less  than  one  and  two  tenths 
per  cent,  of  the  whole  population,  or  about  five  and 
one  fourth  per  cent,  of  the  whole  body  of  qualified 
electors  of  the  State, — and  carried  by  a  majority  of 
the  16,009  votes  cast,  that  is,  by  8,005  votes, — or, 
indeed,  for  that  matter,  by  any  smaller  number 
which  might  constitute  a  majority  of  the  votes 
cast  on  the  proposition  to  amend. 

The  end  of  the  institution,  maintenance  and  admin- 
istration of  government  [runs  the  preamble  to  the 
constitution  of  Massachusetts]  is  to  secure  the  exist- 
ence of  the  body-politic,  to  protect  it,  and  to  furnish 
the  individuals  who  compose  it  with  the  power  of 
enjoying,  in  safety  and  tranquillity,  their  natural  rights 
and  the  blessings  of  life.  ...  It  is  the  duty 
of  the  people,  therefore,  in  framing  a  constitution  of 
government,  to  provide  for  an  equitable  mode  of 
making  laws,  as  well  as  for  an  impartial  interpretation 
and  a  faithful  execution  of  them ;  that  every  man  may, 
at  all  times,  find  his  security  in  them.1 

The  uncertain  sands  of  shifting  popular  inclina- 
tion, upon  which  the  security  of  life,  liberty,  and 
property  depend  under  the  constitution  of  Arizona, 
are  far  remote  from  the  conceptions  of  the  framers 
of  either  the  Massachusetts  constitution  of  1780 
or  the  Constitution  of  the  United  States. 

But  this  is  not  all.  Every  public  officer  in  the 
State  of  Arizona  holding  a  public  office,  either  by 

1  Poore's  Charters  and  Constitutions,  p.  956. 


256  The  Changing  Order 

election  or  appointment,  whether  it  be  executive, 
legislative,  or  judicial,  is  made  subject  to  recall  by 
qualified  electors  for  the  district  for  which  he  is 
elected  to  such  office,  which  district  may  include 
the  whole  State.  Electors  to  the  number  of 
twenty -five  per  cent,  of  the  vote  cast  at  the  last 
preceding  general  election  for  all  of  the  candidates 
for  the  office  held  by  such  officer,  may,  by  petition, 
demand  his  recall.  This  petition  must  contain  a 
general  statement  in  not  more  than  two  hundred 
words  of  the  grounds  of  such  demand,  and  unless 
the  officer  against  whom  it  is  directed  shall  offer 
his  resignation  within  five  days  after  it  is  filed, 
a  special  election  must  be  ordered,  to  be  held  not 
less  than  twenty  nor  more  than  thirty  days  after 
such  order,  to  determine  whether  he  shall  be 
recalled.  On  the  ballots  at  said  election  shall  be 
printed  the  reasons  as  set  forth  in  the  petition  for 
demanding  his  recall,  and  in  not  more  than  two 
hundred  words,  the  officer's  justification  of  his  course 
in  office.  Unless  he  otherwise  request,  in  writing, 
his  name  shall  be  placed  as  a  candidate  on  the 
official  ballot  without  nomination.  Other  candi- 
dates for  the  office  may  be  nominated  to  be  voted 
for  at  such  election,  and  the  candidate  who  shall 
receive  the  highest  number  of  the  votes  cast  shall 
be  declared  to  be  elected  for  the  remainder  of  the 
term;  and  thereupon,  if  the  incumbent  does  not 
receive  the  highest  number  of  votes  cast,  he  shall 
be  deemed  to  be  removed  from  office,  upon 
qualification  of  his  successor.     Such  recall  petition 


New  States  and  Constitutions    257 

may  be  circulated  against  any  officer  after  he  has 
held  his  office  for  a  period  of  six  months,  and 
against  a  member  of  the  Legislature  at  any  time 
after  five  days  from  the  beginning  of  the  first 
session  after  his  election. 

After  one  recall  petition  and  election  no  further 
recall  petition  shall  be  filed  against  the  same  officer 
during  the  term  for  which  he  was  elected,  unless 
petitioners  signing  such  petition  shall  first  pay  into 
the  public  treasury  which  has  paid  such  election  ex- 
penses all  expenses  of  the  preceding  election. 

Subject  only  to  this  provision,  any  number  of 
recall  petitions  may  be  directed  at  the  same  official 
until  his  ejection  shall  have  been  secured. 

Provision  is  also  made  for  amending  the  constitu- 
tion by  a  vote  of  a  majority  of  the  members  elected 
to  each  of  the  two  houses  of  the  Legislature,  and 
submission  to  popular  vote.  No  convention  may 
be  called  by  the  Legislature  to  propose  amendments 
to  the  constitution,  or  a  new  constitution,  unless 
the  law  providing  for  such  convention  shall  first 
be  approved  by  the  people  on  a  referendum  vote 
at  a  regular  or  special  election;  and  any  amend- 
ments, alterations,  revisions,  or  new  constitution 
proposed  by  such  convention  shall  be  submitted 
to  the  electors  at  a  general  or  special  election,  and 
be  approved  by  the  majority  of  the  electors  voting 
thereon  before  the  same  shall  become  effective. 

The  advocates  of  the  scheme  of  so-called  popular 
government  embodied  in  the  Arizona  constitution 
17 


258  The  Changing  Order 

have  vigorously  opposed  the  approval  of  that  of 
New  Mexico  as  reactionary,  and  have  as  strenu- 
ously asserted  the  republican  character  of  the 
plan  proposed  for  Arizona.  It  is  an  interesting 
paradox  that  the  whole  tendency  of  modifications 
in  the  established  forms  of  republican  government 
advocated  as  accomplishing  a  greater  popular 
participation  in  government,  is  to  confer  power 
upon  a  small  minority  of  the  people  to  control  not 
only  the  making  of  laws,  but  of  constitutions. 

The  postulate  of  American  political  faith  is  that 
governments  derive  their  just  powers  from  the 
consent  of  the  governed.  Taken  in  the  literal, 
etymological  sense  of  the  term,  no  government  has 
ever  existed — certainly  not  on  this  continent — 
which  was  framed  with  the  active  conscious  agree- 
ment of  all  those  who  were  to  be  subject  to  it; 
while,  of  course,  all  government  has  rested,  and 
must  necessarily  rest  upon  the  more  or  less  passive 
acquiescence  or  assent  of  those  governed. 

The  Massachusetts  constitution  of  1780  recites 
that — 

The  people  of  this  commonwealth  have  the  sole  and 
exclusive  right  of  governing  themselves  as  a  free, 
sovereign,  and  independent  State;  [and  that]  the  people 
alone  have  an  incontestable,  unalienable  and  inde- 
feasible right  to  institute  government,  and  to  reform, 
alter,  or  totally  change  the  same  when  their  protection, 
safety,  prosperity,  and  happiness  require  it.1 

v   x  Poore's  Charters  and  Constitutions,  958. 


New  States  and  Constitutions    259 

Yet  the  right  under  that  constitution  to  choose 
representatives  to  the  general  assembly  is  limited 
to  male  persons 

being  twenty-one  years  of  age,  and  resident  in  any 
particular  town  in  this  commonwealth,  for  the  space 
of  one  year  next  preceding,  having  a  freehold  estate 
within  the  same  town,  of  the  annual  income  of  three 
pounds,  or  any  estate  of  the  value  of  sixty  pounds. 

The  right  of  suffrage,  it  was  held  by  the  Supreme 
Court  of  the  United  States  in  Minor  v.  Happersett, x 
is  not  a  necessary  incident  to  citizenship  of  the 
United  States,  and  whether  women  shall  be  allowed 
to  vote  or  no  is  a  matter  left  entirely  to  the  dis- 
cretion of  the  State  governments.  In  his  opinion 
in  that  case,  Chief  Justice  Waite  points  out  that 
when  the  Federal  Constitution  was  adopted,  in  no 
State  were  all  the  citizens  permitted  to  vote,  and 
he  summarizes2  the  various  qualifications  required 
in  the  different  States  as  a  condition  to  participa- 
tion in  elections.  In  no  instance  were  women, 
married  or  single,  given  the  right  of  suffrage. 
They  were  expressly  excluded  from  suffrage  in 
nearly  all  the  States  by  the  express  provision  of 
their  constitution  and  laws.  "In  all,"  to  quote  the 
language  of  the  Chief  Justice,  "the  people  partici- 
pated to  some  extent,  through  their  representatives 
elected  in  the  manner  specifically  provided." 

The  fact  is,  that  even  government  by  folkmoot 
or  town  meeting,  was  government  by  a  certain 

1  21  Wall.,  163.  'See  p.  172  et  seq. 


260  The  Changing  Order 

number  of  the  community,  less  than  all,  assuming 
to  represent  those  who,  from  motives  of  policy 
or  tradition,  were  excluded  from  participation  by 
those  who  were  strong  enough  to  exclude  them. 
So  at  an  early  date,  in  this  country,  the  unwieldy 
nature  of  government  by  a  large  assembly  of  the 
adult  male  population,  possessing  agreed  qualifica- 
tions to  entitle  them  to  participate,  brought  about 
the  plan  of  choosing  a  practicable  number  of  dele- 
gates to  meet  and  enact  "such  laws  and  ordinances 
as  shall  be  judged  to  be  good  and  wholesome  for 
the  whole." 

This  plan  of  the  qualified  electorate  choosing 
representatives  to  make  laws,  naturally  led  to  the 
formulation  of  charters  or  constitutions  prescrib- 
ing the  rules  and  limitations  within  which  such 
representatives  should  act,  and  in  nearly  all  of 
these  constitutions,  certain  inalienable  rights  are 
enumerated  which  must  be  preserved,  and  which 
lawmakers  must  not  trench  upon. 

In  the  framing  of  the  early  State  constitutions, 
as  indeed  in  most  of  the  later  ones,  care  was 
observed  to  secure  their  approval  by  as  large  a 
number  of  the  adult  male  population  as  was 
practicable.  In  general,  the  delegates  were 
chosen  by  votes  at  a  special  election,  and  after 
their  work  was  completed  it  was  submitted  to  the 
qualified  electors  for  their  assent.  The  sense  of 
obligation  felt  by  delegates  engaged  in  the  high 
duty  of  framing  the  fundamental  law  is  expressed 
in  the  address  issued  by  Mr.  Bowdoin,  the  Presi- 


New  States  and  Constitutions     261 

dent  of  the  Massachusetts  constitutional  con- 
vention of  1779,  enjoining  upon  the  members  of 
the  convention  the  exertion  of  their  best  abilities 
in  framing  "a  new  and  a  good  Constitution  of 
Government,"  and  stating  that  "as  the  framing 
it,  and  its  acceptance,  when  framed,  must  greatly 
depend  on  the  collective  wisdom  of  the  Convention 
being  had,  in  the  final  determination  on  every 
part  of  it,  but  which  cannot  be  had  without  a 
general  and  constant  attendance, "  he  was  directed 
by  vote  of  the  convention  "to  enjoin  upon  the 
members,  from   its   necessity   and   importance,   A 

CONSTANT  AND  GENERAL  ATTENDANCE  accord- 
ingly."1 

It  is  not  to  be  wondered  that  a  constitution  so 
framed  should  have  remained  to  this  day,  with 
but  little  amendment,  as  the  living  fundamental 
law  of  the  great  Bay  State. 

In  order  to  secure  the  widest  possible  popular 
concurrence  in  the  choice  of  delegates  to  the 
Pennsylvania  convention  of  1777,  commissioners 
were  appointed  by  the  assembly 

To  go  to  the  house  or  place  of  residence  of  each  and 
every  freeman  entitled  to  vote  for  members  of  Gen- 
eral Assembly  within  their  respective  townships, 
buroughs,  wards  or  districts,  or  to  take  some  other 
opportunity  of  meeting  with  them, 

to  secure  from  every  freeman,  in  writing,  his  vote 
or  answer  to  the  proposition,  which  should  be 

1  Lobingier,  pp.  172-3. 


262  The  Changing  Order 

put  in  a  box  provided  for  the  purpose  and  returned 
to  the  general  assembly. x 

Unfortunately,  the  British  invasion  suspended 
the  carrying  out  of  this  rather  novel  but  highly 
commendable  plan;  but  subsequently,  by  a  more 
orthodox  method,  delegates  were  chosen  by 
popular  election  who  prepared  the  constitution 
which  remained  the  fundamental  law  of  Pennsyl- 
vania until  1838. 

Framed,  therefore,  by  delegates  especially 
chosen  for  the  purpose,  with  the  design  of  estab- 
lishing a  permanent  and  stable  form  of  government, 
until  a  recent  date  the  constitutions  of  all  the 
States  avoided  detail,  and  laid  down  merely  the 
general  outlines  of  the  frame  of  government,  within 
whose  limits  details  were  to  be  supplied  from  time 
to  time  by  the  Legislature  constituted  accord- 
ing to  its  terms;  and  provisions  were  embodied 
with  respect  to  amendments,  calculated  to  se- 
cure deliberate,  matured  action,  and  especially  to 
require  the  active  concurrence  in  the  changes 
proposed  of  an  actual  majority  of  the  qualified 
electors. 

Jefferson's  proposed  constitution  for  Virginia 
contained  a  provision  that  none  of  the  fundamental 
laws  and  principles  of  government  should  be  re- 
pealed or  altered  but  by  the  personal  consent  of 
the  people,  at  meetings  held  in  the  respective 
counties,  the  people  of  two  thirds  of  the  counties  to 
give  their  suffrage  for  any  particular  alteration.2 

1  Lobingier,  p.  151.  a  Ibid.,  p.  146. 


New  States  and  Constitutions     263 

This  Jeffersonian  theory  of  making  the  alteration 
of  the  constitution  dependent  not  only  upon  a 
certain  percentage  of  the  vote  cast,  but  upon  the 
consent  of  a  specified  percentage  of  the  geograph- 
ical subdivisions  of  the  State,  as  we  have  seen, 
is  embodied  in  the  proposed  constitution  of  New 
Mexico.1  The  first  constitution  of  Georgia  re- 
quired the  consent  of  a  majority  of  the  counties 
to  any  amendment.  The  Massachusetts  consti- 
tution of  1780  was  to  take  effect  upon  a  vote  of 
two  thirds  of  the  free  whites  voting  upon  it. 

In  general,  the  State  constitutions  prior  to  the 
very  recent  ones,  required  the  vote  of  at  least  a 
majority,  sometimes  of  two  thirds  of  each  of  the 
houses  of  the  Legislature  in  favor  of  a  proposed 
amendment,  sometimes  at  two  successive  sessions 
of  the  Legislature,  to  be  followed  by  submission 
to  popular  vote  and  adoption  by  at  least  a  majority 
of  all  votes  cast  with  respect  to  the  proposition; 
sometimes  by  a  certain  proportion  of  the  entire 
qualified  electorate.  There  would  seem  to  be 
little  use  in  choosing  a  convention  of  delegates  to 
carefully  and  painstakingly  frame  a  constitution, 
if,  after  adoption  by  popular  vote,  no  stability  or 
degree  of  permanency  is  secured,  but  the  funda- 
mental law  may  be  changed  as  readily  as,  and  per- 
haps more  readily  than  an  ordinary  act  of  the 
Legislature.     The  system  which  was  the  evolu- 

1  This  provision  was  attacked  in  Congress  with  such  success 
that  the  people  of  New  Mexico  were  compelled  to  modify  it 
as  a  condition  to  admission  into  the  Union  (see  37  Stats., 
vol.  i.,  p.  39;  vol.  ii.,  p.  1723). 


264  The  Changing  Order 

tion  of  American  growth  and  institutions;  the  dis- 
tinctively American  plan  of  government  under 
fundamental  law,  framed  with  a  view  to  its  con- 
tinuance unless  changed  with  equal  solemnity, 
is  absolutely  at  variance  with  the  new  scheme  of 
government  by  initiative,  referendum,  and  recall 
embodied  in  the  constitutions  of  Oklahoma  and 
Arizona:  a  scheme  which,  as  Mr.  Bryce  has  pointed 
out  in  The  American  Commonwealth ,x  first  made 
its  appearance  in  modern  Europe  as  a  provision 
of  the  French  constitution  framed  by  the  national 
convention  in  1793,  and  which  has  peculiarly 
flourished  as  a  feature  of  the  government  of 
Switzerland.2  The  real  question  presented  is 
whether  or  not  all  the  people  shall  be  governed 
by  representatives  chosen  for  the  purpose  in  an 
orderly,  regular  way,  acting  in  accordance  with  a 
well-matured  fundamental  law,  adopted  by  the 
active  concurrence  of  at  least  a  majority  of  the 
adult  male  population;  or  by  casual  minorities 
acting  without  direct  responsibility,  under  the  hap- 
hazard system  of  initiative  or  referendum. 

By  the  constitution  of  Oklahoma,  suffrage  is 
restricted  to  male  citizens,  except  at  school  dis- 
trict elections  or  meetings;  and  by  a  recent  con- 
stitutional amendment3  adopted  in  deliberate 
disregard  of  its  solemn  compact  with  the  United 

1  Vol.  i.,  p.  465. 

9  2  Dodd,  Modern  Constitutions,  p.  258. 

3  Amendment  as  section  4A  of  Article  3  of  Constitution  Session 
Laws,  1910,  p.  285.  See  also  Atwater  v.  Hassett,  in  Pacific 
Rep.,  812. 


New  States  and  Constitutions    265 

States,  all  negroes  have  been,  in  effect,  disfran- 
chised; so  that  out  of  a  total  population  of  1,414,- 
042  (according  to  the  1907  census),  not  exceeding 
334,035  white  males  of  the  age  of  twenty-one 
years  and  upwards  are  permitted  to  vote.  Fifteen 
per  cent,  of  this  number,  or  50,105  electors,  may 
set  in  motion  a  proposition  to  amend  the  funda- 
mental law,  which  will  become  effective  if  ap- 
proved by  a  majority  of  those  voting  on  the 
proposition,  no  matter  how  small  a  percentage 
of  the  whole  population  or  of  the  qualified  voting 
population  that  number  may  be. 

The  proposed  constitution  of  Arizona  also  re- 
stricts the  suffrage  to  male  citizens  of  the  United 
States  of  the  age  of  twenty-one  years  or  over,  who 
shall  have  resided  in  the  State  one  year  immedi- 
ately preceding  the  election  (Art.  VII.,  sec.  2),  so 
that,  out  of  a  total  population  of  204,354,  according 
to  the  last  census,  not  exceeding  45,323  white  males 
of  twenty-one  years  and  upwards  are  permitted  to 
vote.  Fifteen  per  cent,  of  this  number,  or  6799 
electors,  may  set  in  motion  a  proposition  to  amend 
the  fundamental  law,  which  will  become  operative 
if  approved  by  a  majority  of  those  voting  on  the 
proposition, — no  matter  how  small  that  number 
might  be. 

In  other  words,  under  the  scheme  of  govern- 
ment proposed  in  the  constitution  of  Arizona,  as 
in  that  of  Oklahoma,  all  the  fundamental  rights  of 
person  and  property  which  are  not  specifically 
guaranteed  and  secured  by  the  Constitution  of 


266  The  Changing  Order 

the  United  States,  but  which  are  left  as  the  sub- 
jects of  State  concern — such  as  the  right  of  religious 
toleration — are  at  the  mercy  of  a  small  minority 
of  the  population.  Of  course,  it  may  be  said  that 
eternal  vigilance  is  the  price  of  liberty,  and  that 
citizens  who  fail  to  assert  their  rights  and  to  be 
vigilant  in  their  protection,  cannot  complain  if 
they  find  them  undermined,  impaired,  or  destroyed. 
Professor  Lobingier  argues  that  statutes  which 
require  the  concurrence  of  a  majority  of  the 
electors  in  constitutional  changes  should  be  con- 
strued so  as  to  require  only  the  consent  of  a 
majority  of  those  voting  on  a  proposition — not  a 
majority  of  all  the  electors.     He  says: 

From  the  standpoint  of  public  policy,  however,  it 
would  seem  that  those  decisions  are  soundest  which 
construe  the  language  wherever  possible  as  requiring 
only  a  majority  of  those  actually  participating  in  the 
vote  on  the  submitted  proposition.  To  declare  a 
constitution  or  amendment  rejected  by  reason  merely 
of  the  indifference  of  those  who,  while  in  attendance 
at  the  polls,  are  so  unmindful  of  the  privilege  of 
popular  ratification  as  to  neglect  its  exercise  when 
opportunity  offers,  is  certainly  to  impair  its  benefits 
and  often  to  impair  its  employment  when  not 
needed.1 

But  if  the  constitution  is  the  expression  of  the 
will  of  the  whole  people,  is  it  not  rather  to  be 
presumed  that,  if  a  majority  of  the  people  really 
feel  that  a  change  in  the  fundamental    law  is 

1  The  People's  Laws,  p.  330. 


New  States  and  Constitutions    267 

necessary,  they  will  affirmatively  so  express  them- 
selves? Let  it  be  necessary  to  secure  the  vote  of 
an  actual  majority  of  the  qualified  votes  to  a 
proposed  constitutional  amendment,  and,  if  the 
change  is  really  desirable  in  the  interest  of  all  the 
people,  that  fact  will  be  made  manifest,  and 
the  vote  will  be  secured.  The  anxiety  of  the  ad- 
vocates of  the  referendum,  initiative,  and  recall  to 
have  them  operative  at  the  instance  of  small 
minorities  of  a  restricted  electorate,  furnishes 
abundant  evidence  that  it  is  they — not  those  who 
oppose  these  innovations — who  do  not  trust  "the 
people"  or  even  a  majority  of  the  people;  but 
that,  under  the  guise  of  serving  the  people,  they 
are  seeking  to  lay  hands  on  the  power  of  the 
people  and  to  arrogate  to  themselves  the  popular 
tribunate. 

Bearing  in  mind  the  practical  workings  of 
everyday  life  in  a  busy,  prosperous,  commercial 
community,  it  is  apparent  that  a  large  number  of 
the  community,  generally  the  most  productive 
portion  of  the  community,  do  not,  and  cannot, 
give  constant  attention  to  the  affairs  of  govern- 
ment. Under  a  scheme  of  government  such  as 
that  proposed  in  the  Arizona  constitution,  a  small 
minority  of  the  qualified  electors  organized  to 
accomplish  any  particular  purpose  can  mold 
the  laws,  and  the  constitution,  to  accomplish 
their  purposes  before  the  great  majority  of  the 
electors  are  even  aware  of  what  is  going  on.  The 
propositions  submitted  to  the  electors  under  the 


268  The  Changing  Order 

scheme  of  initiative  and  referendum  are  fixed,  and 
put  before  the  voters  without  the  advantage  of 
the  examination,  discussion,  and  debate  which  have 
been,  throughout  the  whole  history  of  English- 
speaking  peoples,  the  crucible  in  which  legislative 
projects  have  been  tried  out  before  enactment  into 
law.  It  is  an  abuse  of  language  to  call  such  a 
scheme  of  government  "popular."  It  is  an  at- 
tempt to  create  a  government  of  all  the  people, 
by  a  minority  of  the  people,  for  a  small  minor- 
ity of  the  people.  To  adopt  it,  would  be  to  sub- 
stitute for  the  institutions  which  are  the  growth 
and  evolution  of  centuries  of  English  and  American 
experience,  the  devices  of  French  revolution  and 
Swiss  socialism. 


XIII 

THE  THEORY  OF  CONSTITUTIONAL  GOV- 
ERNMENT IN  1787  AND  IN  19121 

ON  December  12,  1787,  by  the  decisive  vote 
of  46  to  23,  Pennsylvania,  the  second  of  the 
States  to  take  such  action,  solemnly  expressed  its 
concurrence  in  the  new  charter,  which  created  a 
nation  of  what  theretofore  had  been  a  mere  confed- 
eration of  separate  sovereignties.  Immediately 
after  the  result  was  known,  as  the  chronicle  of  the 
time  tells  us, 

the  convention  (accompanied  by  his  excellency  the 
President,  the  Vice-President,  and  the  members  of 
the  Supreme  Executive  Council ;  also  by  several  mem- 
bers of  Congress,  the  faculty  of  the  University,  the 
magistrates  and  militia  officers  of  the  City)  went  in 
procession  to  the  Court  House,  where  the  ratifica- 
tion of  the  Constitution  of  the  United  States  was  read, 
amidst  the  acclamations  of  a  great  concourse  of  citi- 
zens. A  detachment  of  the  militia  train  of  artillery 
(in  uniform)  fired  a  federal  salute,  and  the  bells  of 
Christ   Church  were  rung  on   this  joyful   occasion; 

1  Address  at  the  Annual  Banquet  of  the  Pennsylvania  Society 
in  the  city  of  New  York,  December  14,  1912. 

269 


270  The  Changing  Order 

after  this,  the  Convention  returned  to  the  State  House 
and  subscribed  the  two  copies  of  the  ratification.  At 
three  o'clock  they  met  and  dined  with  the  members 
of  the  Supreme  Executive  Council,  several  members 
of  Congress  and  a  number  of  citizens,  at  Mr.  Epple's 
tavern ;  where  the  remainder  of  the  day  was  spent  in 
mutual  congratulations  upon  the  happy  prospect  of 
enjoying  once  more,  order,  justice  and  good  govern- 
ment in  the  United  States. 

The  lead  of  Pennsylvania  was  rapidly  followed 
by  the  other  States,  and  more  than  the  requisite 
number  having  ratified  the  Constitution,  on  July 
4,  1788,  the  twelfth  anniversary  of  the  Declaration 
of  Independence,  the  good  citizens  of  Pennsyl- 
vania celebrated  with  joyful  hearts  the  adoption 
of  that  Constitution  which  they  believed  would 
"form  a  more  perfect  union  "  than  the  Con- 
federation of  the  States  had  been,  and  would 
"establish  justice,  insure  domestic  tranquillity, 
provide  for  the  common  defence,  promote  the 
general  welfare,  and  secure  the  blessings  of 
liberty"  to  the  people  of  the  United  States  and 
their  posterity. 

The  new  charter  of  government  was  not  adopted 
without  opposition.  In  Pennsylvania,  as  else- 
where, there  was  a  considerable  minority  who 
fought  against  it  until  the  last  moment.  Their 
objections  were,  in  effect,  first  that  the  consolida- 
tion of  powers  in  the  new  government  would  be  de- 
structive of  the  States ;  second,  that  the  separation 
of  the  executive,  legislative,  and  judicial  powers 


Constitutional  Gov't  in  1787  and  191 2  271 

of  government  was  not  complete;  and,  third,  and 
above  all,  that  the  Constitution  contained  no  bill 
of  rights.  The  fifteen  amendments  proposed  in 
the  Pennsylvania  convention  by  Mr.  Whitehill 
contained  in  substance  those  which  were  sub- 
sequently formulated  and  proposed  to  the  legis- 
latures of  the  several  States  by  the  first  Congress, 
and  which,  having  been  ratified  by  the  requisite 
number  of  States  between  September,  1789,  and 
December,  1791,  became  the  first  ten  amendments 
to  the  Constitution.  Their  adoption  removed 
practically  every  serious  objection  which  had 
been  urged  against  the  Constitution,  and  left  it  as 
the  expression  of  the  will  of  the  whole  people. 
With  the  exception  of  the  nth  Amendment,  which 
became  effective  January  8, 1798,  adopted  to  relieve 
the  wounded  susceptibilities  of  the  States,  follow- 
ing the  decision  in  the  case  of  Chisholm  against  the 
State  of  Georgia,  that  the  Federal  courts  had 
jurisdiction  under  the  Constitution  of  suits  by 
citizens  against  the  States;  and  the  12th  Amend- 
ment, which  took  effect  September,  1804,  modify- 
ing the  provisions  of  Article  II.  so  as  to  provide  for 
specific  and  separate  votes  for  President  and 
Vice-President  in  the  Electoral  College  and  in  the 
Congress,  no  amendments  to  the  Constitution  were 
adopted  until  the  13th,  14th,  and  15th  Amend- 
ments which  followed  the  Civil  War,  and  which 
embodied  the  results  of  a  contest  respecting 
slavery,  which,  admittedly,  had  been  left  unsettled 
by  the  framers  of  the  Constitution,  because  then 


272  The  Changing  Order 

incapable  of  solution,  and  which  could  only  be 
settled  by  the  arbitrament  of  war. 

Of  the  government  under  this  Constitution, 
Daniel  Webster  said,  in  1850: 

We  have  a  great,  popular,  constitutional  govern- 
ment, guarded  by  law  and  by  judicature,  and  de- 
fended by  the  affections  of  the  whole  people.  No 
monarchical  throne  presses  these  States  together,  no 
iron  chain  of  military  power  encircles  them;  they 
live  and  stand  under  a  government  popular  in  its  form, 
representative  in  its  character,  founded  upon  prin- 
ciples of  equality,  and  so  constructed,  we  hope,  as  to 
last  forever. 

It  did  survive  one  of  the  greatest  internecine 
struggles  recorded  in  history.  The  war  amend- 
ments to  it,  perpetuated  the  removal  of  slavery 
from  the  permissible  domestic  institutions  of  the 
States,  and  imposed  restrictions  upon  State 
action  concerning  individuals,  which,  in  effect, 
extended  as  limitations  upon  the  powers  of  the 
States,  some  of  the  provisions  of  the  Bill  of  Rights, 
which  the  first  ten  amendments  had  made  restric- 
tive upon  the  national  legislature. 

The  establishment  of  this  Constitution  and  the 
growth  and  development  of  the  national  govern- 
ment under  it,  for  a  century  commanded  the  pride 
of  Americans  and  the  admiration  of  the  world. 
Every  new  citizen  was  required  by  law,  as  he  still 
is,  to  declare  his  attachment  to  its  principles; 
every  officer  of  the  government  to  swear  that  he 


Constitutional  Gov't  in  1787  and  1912  273 

would  support  and  defend  it.  The  Constitution 
was  the  Ark  of  the  American  Covenant,  and  the 
author  of  The  American  Commonwealth,  writing 
in  1888,  said  that  reverence  for  it  "is  itself  one  of 
the  most  wholesome  and  hopeful  elements  in  the 
character  of  the  American  people." 

The  one  hundredth  anniversary  of  its  adoption 
was  celebrated  in  1889,  with  joyful  festivities 
throughout  the  United  States,  and  paeans  were  sung 
in  all  parts  of  the  country  in  praise  of  the  great 
men  whose  wisdom  and  patriotism  and  prescience 
had  framed  for  a  little  confederation  of  thirteen 
States,  containing  but  three  millions  of  people, 
a  charter  of  government  adequate  to  the  growing 
needs  of  a  compact  nation  of  thirty-six  States  with 
a  population  of  seventy  millions  or  more. 

Perhaps  in  the  very  excess  of  this  praise  is  to  be 
found  the  first  germ  of  that  analysis  and  criticism 
which  has  resulted  in  a  modern  school  of  political 
thought  which  finds  little  in  the  Constitution 
to  praise,  much  to  criticize,  and  a  great  deal  to 
alter.  It  was  because  certain  Athenians  became 
tired  of  hearing  Aristides  called  "The  Just" 
that  they  united  in  the  movement  to  ostracize 
him;  and  the  constant  and  extreme  assertions  of 
the  excellences  of  the  Constitution  perhaps  have 
led  men  to  charge  it  with  responsibility  for  con- 
ditions which  might  have  arisen  under  any  con- 
stitution, and,  without  stopping  to  consider  whether 
or  not  those  evils  had  any  necessary  connection 
with  the  mere  form  and  structure  of  government, 

IS 


274  The  Changing  Order 

to  make  it  the  goat  upon  which  to  load  responsi- 
bility for  all  the  political  sins  which  had  become 
odious  to  the  people. 

The  author  of  The  American  Commonwealth 
was  too  wise  a  student  of  political  history  to  be 
misled  by  the  chorus  of  gratulation  which  Ameri- 
cans were  singing  when  he  was  writing  the  first 
edition  of  that  great  work,  and  they  were  celebrat- 
ing the  hundredth  anniversary  of  the  adoption  of 
the  Constitution. 

I  might  plead  [he  wrote]  that  America  changes  so 
fast  that  every  few  years  a  new  crop  of  books  is 
needed  to  describe  the  new  face  which  things  have  put 
on,  the  new  problems  that  have  appeared,  the  new 
ideas  germinating  among  her  people,  the  new  and 
unexpected  developments  for  evil  as  well  as  for  good 
of  which  her  established  institutions  have  been  found 
capable. 

But  I  doubt  whether  even  that  sagacious  ob- 
server of  our  national  affairs  could  have  foreseen 
how  rapid  would  be  the  change  in  the  attitude  of  a 
large  part  of  the  American  people  towards  their 
constitutional  institutions  which  has  taken  place 
since  1887.  Then,  the  Constitution  was  praised 
because  of  the  nice  distribution  of  the  legislative, 
executive,  and  judicial  powers  of  government 
provided  for  in  it;  separate  in  the  independence 
of  their  functions,  but  correlated  by  the  partici- 
pation of  the  individual  representatives  of  one 
branch  in  the  exercise  of  some  of  the  functions  of 


Constitutional  Gov't  in  1787  and  191 2  275 

the  others.  To-day,  a  school  of  thought,  number- 
ing many  adherents,  maintains  that  all  constitu- 
tions founded  on  the  separation  of  powers  are  weak 
and  ailing,  and  that,  as  a  matter  of  fact,  the  doc- 
trine of  the  separation  of  powers  of  government  is 
the  prime  cause  of  the  corruption  of  American 
politics;  that  its  scheme  is  not  made  for,  and 
is  not  susceptible  of,  conversion  to  democratic 
use. 

The  Constitution  was  praised  as  providing  ade- 
quate checks  and  balances  to  prevent  the  destruc- 
tive results  of  the  sudden,  uninformed  impulse  of 
the  people;  but  the  modern  doctrine  is  that  the 
system  of  checks  and  balances  exists  for  the  pur- 
pose of  preventing  the  people's  rule;  that  the 
impulses  of  the  people  are  never  uninformed,  and 
their  actions  are  always  just. 

Democracy  [the  late  E.  L.  Godkin  once  wrote]  really 
means  a  profound  belief  in  the  wisdom  as  well  as  the 
power  of  the  majority,  not  on  certain  occasions,  but 
at  whatever  time  it  is  consulted. 

The  progressive  democracy  of  to-day  extends 
the  same  principle  to  casual  majorities  of  those 
voting  on  any  question,  however  small  a  propor- 
tion of  the  whole  electorate,  and  imputes  to  them 
impeccable  and — temporarily,  at  least — conclu- 
sive wisdom.  This  is  a  very  recent  development 
of  democratic  theory.  Only  twenty-two  years 
ago,  Mr.  Grover  Cleveland,  speaking  of  the  framers 
of  the  Constitution  at  the  centennial  anniversary 


276  The  Changing  Order 

of  the  organization  of  the  Supreme  Court  of  the 
United  States,  said: 

Though  bitter  experience  had  taught  them  that  the 
instrumentalities  of  government  might  trespass  upon 
freedom,  and  though  they  had  learned  in  a  hard  school 
the  cost  of  the  struggle  to  wrest  liberty  from  the 
grasp  of  power,  they  refused,  in  the  solemn  work  they 
had  in  hand,  to  take  counsel  of  undue  fear  or  distract- 
ing perturbation,  and  they  calmly  and  deliberately 
established  as  a  function  of  their  government  a  check 
upon  unauthorized  freedom  and  a  restraint  upon 
dangerous  liberty. 

To-day  the  junior  Senator  from  Oklahoma,  per- 
haps the  most  prominent  exponent  of  the  new 
so-called  Code  of  the  People's  Rule,  tells  us  that  the 
system  of  checks  and  balances  was  established  by 
the  Federalists  for  the  purpose  of  putting  an  end 
to  popular  rule,  and  should  be  done  away  with — 
as  it  has  been  under  the  constitution  of  his  State, 
and  by  those  of  a  number  of  other  States  adopted 
during  the  last  dozen  years. 

The  Constitution  was  long  praised  for  the  repre- 
sentative character  of  the  government  which  it 
established:  but  the  modern  theory  is  that  repre- 
sentatives of  the  people  cannot  be  relied  upon  to 
carry  out  the  people's  will,  and  that  the  people 
must  themselves,  therefore,  by  direct  action,  make 
their  own  laws,  and  directly  control  the  execution 
of  those  laws  by  the  officials  of  their  government. 

The  constitutional  theory  of  government  was, 


Constitutional  Gov't  in  1787  and  191 2  277 

that  the  people  should  choose  by  popular  vote 
representatives  who  should  be  entrusted  with  ample 
powers,  and  given  a  reasonable  time  within  which 
to  work  out  the  results  which  should  justify  them- 
selves to  the  people  when  they  were  thoroughly 
informed  concerning  them.  The  recent ' '  popular ' ' 
theory  is  that  the  representatives  be  given  but  little 
power,  their  actions  be  directly  circumscribed  by 
minute  restrictions,  their  work  be  subject  at  all 
times  to  direct  interference  by  popular  vote,  and 
themselves  subject  to  summary  removal  from  office 
at  the  instance  of  a  small  minority  of  the  people, 
and  upon  the  vote  of  a  bare  majority  of  a  perhaps 
equally  small  minority. 

The  objection  which  weighed  most  with  the 
people  when  the  Constitution  was  under  considera- 
tion, was  that  it  contained  no  Bill  of  Rights;  and 
the  prompt  adoption  of  the  first  ten  amendments 
evidenced  the  jealous  determination  of  the  people, 
by  a  distinct  declaration  of  limitations  upon  the 
power  of  government  over  the  individual  citizen, 
to  protect  the  humblest  as  well  as  the  most  power- 
ful individual  against  the  abuse  of  power.  These 
provisions  were,  however,  only  limitations  upon 
the  powers  of  the  national  government  itself. 
After  the  Civil  War,  a  belief  in  the  necessity  of 
protecting  the  freedmen  and  their  descendants 
against  invasion  of  their  newly  established  right 
to  liberty,  led  to  the  extension  of  the  same  prin- 
ciples against  action  by  the  States,  through  the 
adoption  of  the  14th  Amendment.     But  as  Judge 


278  The  Changing  Order 

Swayze  has  pointed  out  in  his  admirable  review 
of  the  subject  in  a  recent  Harvard  Law  Review: 

The  fourteenth  amendment  does  not  protect  the 
citizen  against  alleged  cruel  and  unusual  punishment 
under  State  authority,  nor  secure  trial  by  jury  in  civil 
or  criminal  cases,  nor  the  right  to  bear  arms,  nor 
immunity  from  prosecution  except  after  indictment 
by  a  grand  jury,  nor  the  right  to  be  confronted  by 
witnesses.  In  these  respects  the  federal  bill  of  rights 
restricts  the  federal  tribunals  only — 

and  for  protection  in  those  respects  the  citizen 
is  still  wholly  dependent  upon  the  institutions  of 
his  State. 

Bills  of  Rights  were — and  still  are — common  to 
the  organic  laws  of  almost  every  State.  They 
were  made  effective — until  recently — by  provisions 
against  amendment,  except  by  so  large  a  vote  as 
to  clearly  evidence  the  change  to  be  the  deliberate 
judgment  of  the  whole  people.  They,  and  the  Bill 
of  Rights  embodied  in  the  Federal  Constitution, 
constitute  what  Senator  Root  has  so  eloquently 
described  as  the 

covenant  between  overwhelming  power  and  every 
weak  and  defenseless  one,  every  one  who  relies  upon 
the  protection  of  his  country's  laws  for  security  to 
enjoy  the  fruits  of  industry  and  thrift,  every  one  who 
would  worship  God  according  to  his  own  conscience, 
however  his  faith  may  differ  from  that  of  his  fellows, 
every  one  who  asserts  his  manhood's  right  of  freedom 
in  speech  and  action — a  solemn  covenant  that  between 


Constitutional  Gov't  in  1787  and  1912  279 

the  weak  individual  and  all  the  power  of  the  people, 
and  the  people's  officers,  shall  forever  stand  the  eternal 
principles  of  justice,  defined  and  made  practically 
effective  by  specific  rules  in  those  provisions  which 
we  call  the  limitations  of  the  Constitution. 

But  the  new  school  rejects  as  unworthy  all  such 
limitations  upon  the  immediate  popular  exercise  of 
power,  and  reduces  Bills  of  Rights  to  mere  counsels 
of  perfection.  It  abandons  all  ideas  of  permanency 
in  the  fundamental  law.  The  constitution  is  to  be 
changed  as  lightly  as  are  codes  of  legal  procedure. 
In  Oregon,  for  example,  its  constitution  was  not 
changed  between  1859  and  1902 — a  period  of  forty- 
three  years .  B  et ween  1 902  and  191  o — eight  years 
— it  was  amended  twelve  times.  This  constitution 
tinkering  is  the  inevitable  result  of  reducing  con- 
stitutions to  the  category  of  statutes.  Especially 
does  the  new  school  object  to  the  American  prin- 
ciple of  judicial  determination  of  whether  or  not 
a  given  legislative  act  falls  within  or  exceeds  the 
limitations  set  by  the  constitution  upon  legislative 
power,  and  seeks  instead  to  submit  to  the  deter- 
mination of  a  temporary  popular  majority  the 
making,  the  constitutionality,  the  interpretation, 
and  the  enforcement  of  laws. 

To  accomplish  these  ends,  constitutions  have 
been  adopted  in  a  number  of  States  which  intro- 
duce those  institutions  known  as  the  initiative  and 
the  referendum  in  lawmaking,  the  recall  of  officials 
of  government  by  popular  vote,  the  imperative 
mandate  to  public  bodies  and  officials,  and  other 


280  The  Changing  Order 

provisions  tending  to  pure  democracy,  taken  largely 
from  the  institutions  of  Switzerland.  These  new 
constitutions  are  become,  in  effect,  elaborate  stat- 
utes, repealable  and  alterable  by  a  majority  of 
those  voting  upon  propositions  to  change  them,  set 
in  motion  by  a  small  percentage  of  the  electorate. 
Senator  Owen,  in  his  The  Code  of  the  People's 
Rule,  says: 

Reports  of  the  favorable  workings  of  such  a  system 
in  Switzerland  began  to  be  published  in  this  country 
in  1 89 1.  The  following  year  there  were  declarations 
for  the  system  by  the  American  Federation  of  Labor 
and  the  Knights  of  Labor,  while  the  newly  organized 
People's  Party,  which  had  absorbed  the  Farmers' 
Alliance,  recommended  that  the  subject  be  studied. 

The  advantages  of  the  new  system  to  the  ac- 
complishment by  large,  well-organized  bodies  of 
particular  classes  of  men,  of  changes  in  govern- 
ment sought  in  the  interests  of  such  classes,  are 
apparent,  and  the  organizations  referred  to  quickly 
saw  in  this  new  governmental  machinery  an  op- 
portunity to  increase  their  influence  in  legis- 
lation, and  their  power  to  mold  governmental 
action  to  their  own  advantage.  To  the  well- 
directed  and  systematic  efforts  of  those  associa- 
tions may  be  attributed,  in  large  measure,  the 
astonishing  progress  made  in  the  adoption  of  the 
new  system  in  many  of  the  States.  The  system 
lends  itself  easily  to  the  establishment  of  class 
government. 


Constitutional  Gov't  in  1787  and  1912  281 

But  that  fact  alone  would  not  adequately  explain 
the  rapid  extension  of  the  Swiss  institutions  in  the 
United  States. 

The  initiative  and  referendum  with  respect  to 
legislation,  in  varying  forms,  have  been  adopted  in 
at  least  seventeen  States;  the  unlimited  recall  of 
public  officials  in  six,  and  movements  looking  to 
the  profound  modification  of  the  fundaments  of 
State  government  are  mooted  in  others.  The 
independence  of  the  judicial  establishment  has 
been  destroyed  by  an  elective  judiciary  with  short 
terms  of  office  and  small  salaries,  subject  to  sum- 
mary removal  from  office  by  popular  vote;  and  a 
Senator  of  the  United  States  has  recently  proposed 
an  amendment  to  the  Constitution  of  the  United 
States  which  would  make  the  correct  interpretation 
of  statutes  the  subject  of  popular  vote,  in  the  face 
of  judicial  exposition.  These  tendencies  cannot 
be  ignored,  because  too  many  people  have  given 
their  adherence  in  some  degree  to  them;  and  it 
becomes  the  patriotic  duty  of  every  citizen  to 
analyze  carefully  the  causes  of  the  discontent  with 
existing  political  and  social  conditions,  which  has 
led  to  the  adoption  of  these  modifications  in  our 
constitutional  scheme,  as  remedies  necessary  to 
the  public  welfare  in  the  eyes  of  those  who  have 
espoused  them,  and  to  endeavor,  if  possible,  to 
meet  those  evils,  without  destroying  a  fabric  of 
government  which  has  so  long  and  so  well  served 
the  needs  of  American  civilization. 

Discontent  with  the  existing  order  of  things,  as 


282  The  Changing  Order 

Mr.  Lowell  once  said,  "pervaded  the  atmosphere 
wherever  the  conditions  were  favorable,  long 
before  Columbus,  seeking  the  back  door  of  Asia, 
found  himself  knocking  at  the  front  door  of  Amer- 
ica. ' '     And  he  added : 

I  say  wherever  the  conditions  are  favorable,  for  it 
is  certain  that  the  germs  of  disease  do  not  stick  or 
find  a  prosperous  field  for  their  development  and  nox- 
ious activity  unless  where  the  simplest  sanitary  pre- 
cautions have  been  neglected.  ...  It  is  only  when 
the  reasonable  and  practicable  are  denied  that  men 
demand  the  unreasonable  and  impracticable;  only 
when  the  possible  is  made  difficult  that  they  fancy 
the  impossible  to  be  easy. 

One  of  the  principal  exponents  of  this  new  demo- 
cratic movement  ascribes  to  "machine  rule"  in 
politics  the  cause  of  all  the  evil  which,  in  his  opin- 
ion, can  only  be  cured  by  the  adoption  of  the 
scheme  of  government  embodied  in  the  initiative, 
referendum,  recall,  imperative  mandate,  direct 
election  of  senators,  etc.,  and  he  gives  to  our  dis- 
tinguished guest  of  this  evening,  Mr.  Bryce,  the 
credit  for  having  first  formulated  in  a  word-picture 
the  whole  evil  institution  known  as  "the  Machine," 
in  the  first  edition  of  his  great  work  on  The 
American  Commonwealth — a  work  which,  from 
the  moment  of  its  publication,  has  been  the  most 
complete,  the  most  authoritative,  and  the  most 
just  description  of  the  political  and  social  institu- 
tions of  this  country  thus  far  written.     It  was  the 


Constitutional  Gov't  in  1787  and  191 2  283 

lifting  of  the  veil  in  this  book,  and  its  widespread 
sale,  Senator  Owen  says,  that,  together  with  other 
reform  literature,  "created  a  mighty  reform  sen- 
timent, which,  combined  with  startling  exposures 
of  the  machine-rule  system  year  after  year,  has 
produced  far-reaching  results." 

The  evils  of  machine  rule,  arose  largely  by  reason 
of  the  apathy  of  the  individual  voter  and  the 
dormant  condition  of  the  public  conscience.  It 
was  because  reasonable  and  practicable  reforms 
in  party  government  were  denied  by  those  who 
profited  by  it,  that  the  extreme  changes  in  our 
governmental  system  have  been  so  enthusiastically 
adopted.  The  "machine/'  in  its  most  offensive 
sense,  and  the  "boss,"  or  political  leader  who 
directed  its  operations,  were  nourished  upon  the 
spoils  system,  which,  to  a  large  extent  has  been 
removed,  by  reforms  in  the  civil  service  of  the 
Nation  and  the  States,  under  which  the  merit 
system  of  appointments  to  public  office  and  a 
security  of  tenure  have  been  established.  The 
machine,  too,  was  nourished  by  the  management 
of  large  contributions  for  campaign  purposes, 
made  by  corporations  and  representatives  of 
interests  seeking  undue  advantages  in  legislation 
and  governmental  action.  But  that  evil  has  been 
greatly  restricted  by  various  acts  of  Congress  and 
of  the  State  legislatures;  measures  whose  enact- 
ment was  compelled  by  public  sentiment,  in  most 
cases  without  resort  to  "initiated"  or  "referred" 
legislation.     It    is   entirely   possible   by   further 


284  The  Changing  Order 

legislation  to  utterly  extirpate  it.  These  con- 
cessions however,  were  made  grudgingly  and 
slowly;  and  the  popular  determination  that  they 
should  be  permanent,  found  expression  in  the 
adoption  of  the  new  institutions  held  out  as 
furnishing  a  means  of  perpetuating  the  reforms 
and  preventing  a  recurrence  of  the  evils.  Worthy 
citizens,  impatient  at  the  slowness  of  reform  un- 
der constitutional  restrictions,  turned  to  the  new 
institutions  as  a  patient  longing  for  speedy  cure 
turns  from  the  regular  practitioner  to  a  quack 
doctor. 

That  the  remedy  may  be  worse  than  the  disease 
is  a  reasonable  apprehension.  Nearly  a  century 
ago,  Chief  Justice  Marshall  pointed  out  the  dan- 
gers of  putting  too  many  things  in  a  constitution : 

A  constitution  to  contain  an  accurate  detail  of  all 
the  subdivisions  of  which  its  great  powers  will  admit 
and  of  all  the  means  by  which  they  may  be  carried 
into  execution,  would  partake  of  the  prolixity  of  a 
legal  code,  and  could  scarcely  be  embraced  by  the  legal 
mind.  It  would  probably  never  be  understood  by  the 
public.  Its  nature  requires,  therefore,  that  only  its 
great  outlines  should  be  marked,  its  more  important 
objects  designated,  and  the  minor  ingredients  which 
compose  these  objects  be  deduced  from  the  nature  of 
the  objects  themselves. 

But  the  great  Chief  Justice  was  speaking  of  a 
constitution  founded  upon  confidence  that  the 
people  as  a  whole  would  be  vigilant  in  the  exercise 


Constitutional  Gov't  in  1787  and  1912  285 

of  their  political  rights  and  duties,  and  that  they 
could  and  would  entrust  the  powers  of  their  gov- 
ernment to  those  whom  they  trusted,  and  who 
would  worthily  discharge  that  trust.  The  mod- 
ern changes  in  government  are  framed  in  a  pro- 
found distrust  of  those  who  are  to  exercise  the 
powers  of  the  State;  and  the  vast  detail  of  the 
new  constitutions,  the  enormous  number  of 
elective  offices  created  by  them,  the  shortness  of 
terms,  and  the  uncertainty  of  tenure,  only  empha- 
size the  same  point  of  view.  No  government  so 
founded  and  so  maintained  can  long  exist. 

It  is,  I  think,  safe  to  say  that  every  one  of  the 
evils  of  modern  politics  is  susceptible  of  removal 
within  the  limits  of  our  established  forms  of 
constitutional  government,  without  destruction  of 
its  representative  republican  character.  Party 
machinery  is,  of  course,  wholly  unrestricted  by  the 
framework  of  the  Constitution.  But  the  needed 
reforms  cannot  be  accomplished  and  perpetuated, 
on  the  one  hand,  by  any  short  cut  to  political 
happiness,  such  as  reformers  eager  for  popular 
applause  would  suggest;  nor,  on  the  other  hand, 
without  the  abandonment  by  every  citizen  of  that 
apathy  which  results,  in  the  face  of  even  a  clam- 
orous public  campaign,  in  less  than  a  majority  of 
the  electorate  voting  upon  propositions  to  radically 
change  the  fundamental  law  of  a  State.  Above 
all,  there  is  no  easy  way  of  securing  good  govern- 
ment. The  virtuous  citizen  who  thinks  he  can 
secure  political  Utopia  by  merely  signing  a  postal 


286  The  Changing  Order 

card  or  a  petition,  may  some  day  awaken  to  the 
discovery  that  he  has  lost  all  that  makes  for 
stability  in  government  and  the  maintenance  of  a 
right  to  life,  liberty,  and  the  pursuit  of  happiness. 
In  the  Pennsylvania  Gazette  for  December  26, 
1787,  is  printed  a  letter  from  a  correspondent 
answering  certain  objections  which  had  been 
made  to  the  new  Constitution  by  Mr.  Mason.  It 
concludes  with  this  exhortation: 

I  entreat  you,  my  fellow  citizens,  to  read  and 
examine  the  new  Constitution  with  candor,  examine 
it  for  yourselves;  you  are  most  of  you  as  learned  as 
the  objector,  and  certainly  as  able  to  judge  of  its 
virtues  or  vices  as  he  is. 

In  the  same  paper  is  printed  a  despatch  from 
Boston,  announcing  the  selection  of  delegates  to 
the  constitutional  convention  from  Massachusetts, 
which  closes  with  the  statement  that  there  could 
be  no  doubt  of  the  adoption  of  the  new  Constitu- 
tion "provided  that  a  spirit  of  candor,  concession, 
and  an  openness  to  conviction  should  pervade  the 
minds  of  the  delegates  chosen  for  the  Convention. " 

In  like  manner  I  entreat  you,  my  fellow-citizens, 
to  carefully  consider  the  causes  for  that  discontent 
which  has  caused  so  large  a  number  of  our  fellow- 
citizens  to  turn  from  those  institutions  of  govern- 
ment which  are  peculiarly  American,  and  which 
were  framed  by  the  most  ardent  lovers  of  liberty — 
liberty  regulated  under  law — who  ever  lived  in 
any  land,  in  any  time.     Consider  them;  and  weigh 


Constitutional  Gov't  in  1787  and  191 2  287 

and  examine  the  advantages  and  the  disadvantages 
of  the  proposed  remedies;  consider  whether  the 
evils  may  not  be  cured  without  the  destruction  of 
our  traditional  institutions;  examine  all  this  in  a 
spirit  of  candor,  concession,  and  openness  to  con- 
viction; and  as  the  writer  from  whom  I  have 
quoted  said,  in  closing  his  letter  in  December,  1787 : 

God  grant  that  prejudice  may  not  make  us  blind  to 
our  best  interest. 


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